THE SINGAPOREAN INVESTOR

A Breakdown of the Magnificent 7's Latest Quarter Results

ljunyuan
Publish date: Wed, 12 Jun 2024, 11:02 AM
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My name is Jun Yuan, and I am the owner of The Singaporean Investor. I am a full-time retail investor and trader since April 2017, and in this website, I'd be sharing with you my personal analyses of Singapore-listed companies, along with advices relating to investing, as well as trading. You can find out more about me here, and check out my long-term portfolio here.
A Breakdown of the Magnificent 7's Latest Quarter Results

For the uninitiated, the term ‘Magnificent 7‘ refers to 7 companies listed on the NASDAQ exchange, namely Alphabet Inc (NASDAQ: GOOG, NASDAQ: GOOGL), Amazon Inc (NASDAQ: AMZN), Apple Inc (NASDAQ: AAPL), Meta Platforms Inc (NASDAQ: META), Microsoft Corporation (NASDAQ: MSFT), Nvidia corporation (NASDAQ: NVDA), and Tesla Inc (NASDAQ: TSLA).

I’m sure most of you would have investments in one or more companies in this list.

Now that the earnings season has passed, I thought it would be interesting to break down each company’s latest quarterly results. If you’re invested in these companies, this will help you stay informed. For those who aren’t, I hope this will give you a clearer picture of their performances.

Let’s begin:

1. Alphabet Inc (NASDAQ: GOOG, NASDAQ: GOOGL)

Alphabet Inc's Website

Image Source: Alphabet Inc’s Website

Incorporated in 1998, Alphabet Inc is the company behind the Google search engine, along with a suite of services (some of them include Gmail, Google Drive, Google Maps, Google Play, and YouTube), with revenue coming mainly from advertising. The company also invests heavily in other ventures such as autonomous vehicles (Waymo), life sciences (Verily), and smart home products (Nest).

The following table is Alphabet Inc’s results for the 1st quarter ended 31 March 2024:

Q1 FY2023Q1 FY2024% Variance
– Google Services
(US$’bil)
$62.0bn$70.4bn+13.5%
– Google Cloud
(US$’bil)
$7.5bn$9.6bn+28.0%
– Other Bets
(US$’bil)
$0.3bn$0.5bn+66.0%
Total Revenue
(US$’bil)
$69.8bn$80.5bn+15.3%
Net Profit
(US$’bil)
$15.1bn$23.7bn+57.0%

Google Services, which encompasses Google Search & Other, YouTube ads, Google Network, as well as Google Subscriptions, Platforms, and Devices, is the tech company’s biggest revenue contributor, at about 87.5% towards its total revenue. This business segment saw a 13.5% year-on-year improvement to US$70.4bn, attributed by increases in Google Search and other advertising revenues, due to a continued strong demand for advertising on Google’s platforms, which led to its total revenue and net profit recording a 15.3% and 57.0% jump for the 1st quarter.

A dividend payout of 20.0 US cents/share has been declared by the company’s board of directors, which will be paid on 14 June 2024.

Alphabet Inc’s CEO, Sundar Pichai, said, “Our results in the first quarter reflect strong performance from Search, YouTube and Cloud. We are well under way with our Gemini era and there's great momentum across the company. Our leadership in AI research and infrastructure, and our global product footprint, position us well for the next wave of AI innovation.”

2. Amazon Inc (NASDAQ: AMZN)

Amazon Inc's Website

Image Source: Amazon Inc’s Website

Amazon Inc is best known for its massive online marketplace where you can buy almost everything – from books and electronics, to clothes and groceries. On top of that, it also provides services through Amazon Prime Video, Amazon Web Services, as well as devices such as the Kindle e-reader, Echo smart speakers, and Fire Tablets.

The following table is Amazon Inc’s financial results for the 1st quarter ended 31 March 2024:

Q1 FY2023Q1 FY2024% Variance
– Net Product
Sales (US$’bil)
$57.0bn$60.9bn+6.8%
– Net Service
Sales (US$’bil)
$70.4bn$82.4bn+17.0%
Total Revenue
(US$’bil)
$127.4bn$143.3bn+12.5%
Net Profit
(US$’bil)
$3.2bn$10.4bn> +100.0%

Net product sales basically comprises of revenue generated from the company’s Amazon online stores, while net service sales consists of revenue generated from Amazon Web Services, subscription services (including Amazon Prime, Amazon Prime Video, and other digital services), third-party seller services, advertising services, and sales of digital products and services (including e-books, audiobooks, music, movies, and apps). Both business segments have a somewhat equal contribution towards Amazon’s total revenue.

Total revenue was up by 12.5%, contributed by improvements in sales in the North America segment (by 12%), international segment (by 10%), as well as in the Amazon Web Services segment (by 17%).

The company’s board of directors did not declare any dividend payouts for its shareholders.

Amazon Inc’s CEO, Andy Jassy, said, “It was a good start to the year across the business, and you can see that in both our customer experience improvements and financial results. The combination of companies renewing their infrastructure modernization efforts and the appeal of AWS's AI capabilities is reaccelerating AWS's growth rate (now at a $100 billion annual revenue run rate); our Stores business continues to expand selection, provide everyday low prices, and accelerate delivery speed (setting another record on speed for Prime customers in Q1) while lowering our cost to serve; and, our Advertising efforts continue to benefit from the growth of our Stores and Prime Video businesses. It's very early days in all of our businesses and we remain excited by how much more we can make customers' lives better and easier moving forward.”

3. Apple Inc (NASDAQ: AAPL)

Apple Inc's Website

Image Source: Apple Inc’s Website

Started off with the Macintosh in 1984, Apple Inc is now a leader in innovation with iPhone, iPad, Mac, Apple Watch, and Apple Vision Pro. This is on top of the App Store, Apple Music, Apple Play, iCloud, and Apple TV+.

The following table is Apple Inc’s financial results for the 2nd quarter ended 30 March 2024:

Q2 FY2023Q2 FY2024% Variance
– iPhone
(US$’bil)
$51.3bn$46.0bn-10.3%
– Mac
(US$’bil)
$7.2bn$7.5bn+4.2%
– iPad
(US$’bil)
$6.7bn$5.6bn-16.4%
– Wearables, Home,
and Accessories
(US$’bil)
$8.8bn$7.9bn-10.2%
– Services
(US$’bil)
$20.9bn$23.9bn+14.4%
Total Revenue
(US$’bil)
$94.8bn$90.8bn-4.2%
Net Profit
(US$’bil)
$24.2bn$23.6bn-2.5%

The iPhone is still the biggest contributor to Apple Inc’s total revenue, at about 50.7%, followed by services (at 26.3%).

As a result of a decline in revenue from iPhone (by 10.3%, due to a weaker demand for its iPhone 15), iPad (by 16.4%, due to a significant drop in sales – in fact, this quarter’s performance was also the weakest in 4 years), as well as in its wearables, home, and accessories (by 10.2%, due to a challenging macroeconomic environment dampening sales in this business segment) business segments, its total revenue saw a 4.2% decline to US$90.8bn.

This resulted in its net profit for the 2nd quarter recording a 2.5% drop to US$23.6bn.

A dividend payout of 25.0 US cents/share has been declared by the board of directors, which was paid out on 16 May 2024.

Apple Inc’s CEO, Tim Cook, said, “Today Apple is reporting revenue of $90.8 billion for the March quarter, including an all-time revenue record in Services. During the quarter, we were thrilled to launch Apple Vision Pro and to show the world the potential that spatial computing unlocks. We're also looking forward to an exciting product announcement next week and an incredible Worldwide Developers Conference next month. As always, we are focused on providing the very best products and services for our customers, and doing so while living up to the core values that drive us.”

4. Meta Platforms Inc (NASDAQ: META)

Meta Platform Inc's Website

Image Source: Meta Platform Inc’s Website

Meta Platforms Inc owns social networking platforms Facebook and Instagram, communication platforms WhatsApp and Messenger, as well as into augmented and virtual reality (through Reality Labs) to help build the next evolution in social technology.

The following table is Meta Platforms’ financial results for the 1st quarter ended 31 March 2024:

Q1 FY2023Q1 FY2024% Variance
– Family of Apps
(US$’bil)
$28.3bn$36.0bn+27.2%
– Reality Labs
(US$’bil)
$0.3bn$0.4bn+33.3%
Total Revenue
(US$’bil)
$28.6bn$36.5bn+27.6%
Net Profit
(US$’bil)
$5.7bn$12.4bn> +100.0%

‘Family of Apps’ includes Facebook, Instagram, Messenger, and WhatsApp, while ‘Reality Labs’ includes the company’s virtual, augmented, and mixed reality-related consumer hardware, software, and content – the former (through advertisements) holds a very heavy weightage in the company’s revenue contribution, at 98.6%.

Both its business segments saw a healthy improvement compared to last year, which contributed to its total revenue and net profit recording a 27.6% and 118% jump respectively.

A dividend payout of 50.0 cents/share was declared, and will be paid out 26 June 2024.

Meta Platforms Inc’s CEO, Mark Zuckerberg, said, “It’s been a good start to the year. The new version of Meta AI with Llama 3 is another step towards building the world’s leading AI. We’re seeing healthy growth across our apps and we continue making steady progress building the metaverse as well.”

5. Microsoft Corporation (NASDAQ: MSFT)

Microsoft Corporation's Website

Image Source: Microsoft Corporation’s Website

Microsoft Corporation is best known for its Windows operating systems and the Microsoft Office suite of products. It also sells hardware like the Xbox gaming console and Surface laptops and tablets. Additionally, Microsoft provides services through its Azure cloud platform and owns the professional networking platform LinkedIn.

The following is Microsoft Corporation’s financial results for the 3rd quarter ended 31 March 2024:

Q3 FY2023Q3 FY2024% Variance
– Productivity & Business
Processes (US$’bil)
$17.5bn$19.6bn+12.0%
– Intelligent Cloud
(US$’bil)
$22.1bn$26.7bn+20.8%
– More Personal Computing
(US$’bil)
$13.3bn$15.6bn+17.3%
Total Revenue
(US$’bil)
$52.9bn$61.9bn+17.0%
Net Profit
(US$’bil)
$18.3bn$21.9bn+20.0%

The tech company reports its revenue under 3 business segments: Productivity & Business Processes (which includes revenue from its Office suite of products, and LinkedIn), Intelligent Cloud (which includes revenue from Azure and other cloud services), and More Personal Computing (which includes revenue from its Windows operating system, Surface laptops and tablets, Xbox, as well as service and news advertising).

‘Intelligent Cloud’ is Microsoft Corporation’s top revenue contributor, at about 43.1% for the 3rd quarter, followed by ‘Productivity & Business Processes’ (at about 31.6%), and ‘More Personal Computing’ (at about 25.2%).

All 3 business segments saw strong double-digit percentage growth, and this contributed to a 17.0% and 20.0% increase in its total revenue and net profit for the 3rd quarter respectively.

A dividend payout of 75.0 US cents/share has been declared by the board of directors, and will be paid out on 13 June 2024.

Microsoft Corporation’s CEO, Satya Nadella, said, “Microsoft Copilot and Copilot stack are orchestrating a new era of AI transformation, driving better business outcomes across every role and industry.”

6. Nvidia Corporation (NASDAQ: NVDA)

Nvidia Corporation's Website

Image Source: Nvidia Corporation’s Website

Nvidia Corporation is a technology company best known for its graphics processing units (GPU), where they produce graphics card for gaming, high-end GPUs for professionals in fields like animation, design, and engineering, GPUs for data centres used for artificial intelligence, deep learning and big data analytics, technology for autonomous vehicles.

The following is Nvidia Corporation’s financial results for the 1st quarter ended 31 March 2024:

Q1 FY2023Q1 FY2024% Variance
– Data Center
(US$’bil)
$4.28bn$22.56bn> +100.0%
– Gaming
(US$’bil)
$2.24bn$2.65bn+18.3%
– Professional
Visualisation
(US$’bil)
$0.30bn$0.43bn+43.3%
– Automotive
(US$’bil)
$0.30bn$0.33bn+10.0%
– OEM & Other
(US$’bil)
$0.08bn$0.08bn
Total Revenue
(US$’bil)
$7.19bn$26.04bn> +100.0%
Net Profit
(US$’bil)
$2.04bn$14.88bn> +100.0%

The company reports its revenue under 5 business segments, and the following is its contribution as a percentage to its total revenue: Data Center (86.6%), Gaming (10.2%), Professional Visualisation (1.6%), Automotive (1.3%), OEM & Other (0.3%).

Particularly, revenue from ‘Data Center’, at US$22.56bn, was a record for the company, an improvement by more than 400% compared to last year – this led to the company’s total revenue and net profit recording a multi-fold increase.

The company has announced a 10-for-1 stock split, and a dividend payout of 10.0 US cent/share (which will be equivalent to 1.0 cent/share on a post-split basis) which will be paid out on 28 June 2024.

Nvidia Corporation’s CEO, Jensen Huang, said, “The next industrial revolution has begun - companies and countries are partnering with NVIDIA to shift the trillion-dollar traditional data centers to accelerated computing and build a new type of data center - AI factories - to produce a new commodity: artificial intelligence. AI will bring significant productivity gains to nearly every industry and help companies be more cost- and energy-efficient, while expanding revenue opportunities.

Our data center growth was fueled by strong and accelerating demand for generative AI training and inference on the Hopper platform. Beyond cloud service providers, generative AI has expanded to consumer internet companies, and enterprise, sovereign AI, automotive and healthcare customers, creating multiple multibillion-dollar vertical markets.

We are poised for our next wave of growth. The Blackwell platform is in full production and forms the foundation for trillion-parameter-scale generative AI. Spectrum-X opens a brand-new market for us to bring large-scale AI to Ethernet-only data centers. And NVIDIA NIM is our new software offering that delivers enterprise-grade, optimized generative AI to run on CUDA everywhere - from the cloud to on-prem data centers and RTX AI PCs - through our expansive network of ecosystem partners.”

7. Tesla Inc (NASDAQ: TSLA)

Tesla Inc's Website

Image Source: Tesla Inc’s Website

Tesla Inc is best known for its fully electric cars. It has also built a global network of fast-charging stations called ‘Superchargers’ to allow its vehicle owners to quickly recharge their cards on long trips. The company is also heavily involved in the development of advanced battery technology (to improve on its efficiency, capacity, and cost), and self-driving technology.

The following is Tesla Inc’s financial results for the 1st quarter ended 31 March 2024:

Q1 FY2023Q1 FY2024% Variance
– Automotive
(US$’bil)
$20.0bn$17.4bn-13.0%
– Energy Generation
& Storage (US$’bil)
$1.5bn$1.6bn+6.7%
– Services & Other
(US$’bil)
$1.8bn$2.3bn+27.8%
Total Revenue
(US$’bil)
$23.3bn$21.3bn-8.6%
Net Profit
(US$’bil)
$2.5bn$1.1bn-56.0%

The key driver in Tesla’s revenue is the ‘Automotive’ business segment (which contributed 81.7% towards its total revenue for the 1st quarter), comprises the sales of its fully electric vehicles, and sales of its automotive regulatory credits. The other business segment, ‘Energy Generation & Storage’ is the sale of its solar energy generation and energy storage products.

The 8.6% decline in its total revenue can be attributed to a 13.0% fall in its ‘Automotive’ business segment, primarily driven by lower average selling prices and decreased deliveries of Model 3 and Model Y vehicles.

Coupled by an increase in operating expenses, the company’s net profit tumbled by 56.0%.

No dividends has been declared by the company.

Closing Thoughts

Apart from Apple (where its financial results was impacted by the slowdown in sales of its latest iPhone model), and Tesla (where its financial results was impacted by lower average selling prices of its fully electric vehicles), the remaining 5 companies in the ‘Magnificent 7’ displayed a resilient set of results (I’m sure you’ll agree with me here that their latest quarterly results is an impressive one).

Of the 7, Nvidia’s results was the strongest – as the company benefitted from immensely from the artificial intelligence/machine learning trend (particularly, revenue in its ‘Data Center’ business segment saw a 400+% increase to a record US$22.56 for the 1st quarter ended 31 March 2024).

With that, I have come to the end of today’s sharing on the latest quarterly results of the ‘Magnificent 7’ companies. Do note that the information presented in this article does not constitute any buy or sell calls for any of the companies. Please do your own research and due diligence before you make any investment decisions.

Disclaimer: At the time of writing, I am not a shareholder of any of the companies in this article.

The post A Breakdown of the Magnificent 7's Latest Quarter Results first appeared on The Singaporean Investor.

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