Google, Apple Disappoint as Tech Earnings Hit by Gloom

A customer stands underneath an illuminated Apple logo as he looks out the window of the Apple store located in central Sydney, Australia, May 28, 2018. (Reuters)
A customer stands underneath an illuminated Apple logo as he looks out the window of the Apple store located in central Sydney, Australia, May 28, 2018. (Reuters)
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Google, Apple Disappoint as Tech Earnings Hit by Gloom

A customer stands underneath an illuminated Apple logo as he looks out the window of the Apple store located in central Sydney, Australia, May 28, 2018. (Reuters)
A customer stands underneath an illuminated Apple logo as he looks out the window of the Apple store located in central Sydney, Australia, May 28, 2018. (Reuters)

Google and Apple on Thursday reported downbeat results for the last quarter of 2022 as Amazon beat expectations, but warned that the coming months would be uncertain in a difficult moment for Big Tech.

The tech titans posted earnings as shares in Meta skyrocketed a day after it reported better results than expected and signaled spending and job cuts, AFP said.

The results follow weeks of unprecedented layoff rounds in the usually unassailable tech sector amid pessimism about the economic outlook.

The souring mood followed a long spell of outsized growth during the peak Covid-19 period when consumers went online for work, shopping and entertainment.

"Big Tech calls from Apple, Amazon, and Alphabet painting a much different picture of demand environment than the tech bears were hoping for," tweeted Wedbush analyst Dan Ives, referring to investors who believe shares are on a downward path.

While earnings reports show there is "caution in the air" there are signs that the companies could be heading for soft landings, the analyst added.

Google parent Alphabet's revenue of $76 billion in its fourth quarter and profit of $13.6 billion were below what it made in the same period a year earlier, with share prices falling more than 3 percent in after-market trade.

Google saw a slump in its crucial advertising sales, which were slightly better than analysts had projected, according to data compiled by Factset.

"It's clear that after a period of significant acceleration in digital spending during the pandemic, the macro economic climate has become more challenging," Google CEO Sundar Pichai said in an earnings call.

Pichai last month announced a plan to lay off 12,000 employees in order to reverse pandemic over-hiring and focus on new areas, especially artificial intelligence.

Google was caught off guard by the sudden rise of user-friendly AI such as ChatGPT, which is seen as a potential rival to Google's popular search engine.

Apple is the only US tech giant that has not announced major layoffs in recent weeks.

The world's biggest company in terms of market value reported a fall in quarterly revenue and profits for the final three months last year, hit by a drop in sales of its flagship iPhones.

Apple sales were hit by curtailed production at factories due to China's zero-Covid policy that was only recently lifted.

"COVID-19 related challenges" that "significantly" reduced Apple's supply of iPhone 14 Pro and iPhone 14 Pro Max lasted through most of December, Apple chief executive Tim Cook said on an earnings call.

- 'Unprecedented circumstances' -
Apple's revenue was $117.1 billion, down 5.4 percent from a year ago for the same quarter a year earlier, missing what analysts had forecast.

"The world continues to face unprecedented circumstances, from inflation to war in Eastern Europe, to the enduring impacts of the pandemic and we know that Apple is not immune to it," Cook said.

Amazon meanwhile reported an inflation-fueled increase in sales despite the company announcing a massive round of layoffs to correct for a hiring binge during the pandemic when business growth ramped up.

"During periods of economic uncertainty, consumers are very careful about how they allocate their resources and where they choose to spend their money," Amazon chief financial officer Brian Olsavsky said on an earnings call.

"We saw them spend less on discretionary categories and shift to lower priced items in value brands in categories like electronics."

Last month, the company said it would let go more than 18,000 employees after the workforce swelled by 800,000 employees during the peak years of the pandemic period.

Amazon's sales figures of $149.2 billion in the quarter were better than initial forecasts by analysts polled by Factset, but its profit took a massive hit, falling to near zero.

"In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon," said CEO Andy Jassy.

The Big Tech earnings dump came a day after Meta said quarterly sales dropped one percent, which beat expectations, and announced that the number of daily users on Facebook hit two billion for the first time.

Shares in Meta ended the formal trading day up 23 percent.



Nvidia CEO Says Power-Saving Optical Chip Tech Will Need to Wait for Wider Use 

The stage is seen after a keynote session at the SAP Center in San Jose, California, on March 18, 2025. (AFP)
The stage is seen after a keynote session at the SAP Center in San Jose, California, on March 18, 2025. (AFP)
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Nvidia CEO Says Power-Saving Optical Chip Tech Will Need to Wait for Wider Use 

The stage is seen after a keynote session at the SAP Center in San Jose, California, on March 18, 2025. (AFP)
The stage is seen after a keynote session at the SAP Center in San Jose, California, on March 18, 2025. (AFP)

A promising new chip technology that aims to cut energy usage is not yet reliable enough for use in Nvidia's flagship graphics processing units (GPUs), Nvidia's CEO Jensen Huang said Tuesday.

Co-packaged optics, as the emerging technology is called, uses beams of laser light to send information on fiber optic cables between chips, making connections faster and with superior energy efficiency to those through traditional copper cables.

During a keynote address to Nvidia's annual developer conference at a packed hockey stadium in San Jose, California on Tuesday, Huang said his company would use the co-packaged optical technology in two new networking chips that sit in switches on top of its servers, saying the technology would make the chips three and a half times more energy efficient than their predecessors.

The switch chips will come out later this year and into 2026 in a small but significant step toward advancing the technology.

But Huang told a group of journalists after his speech that while Nvidia examined using it more widely in its flagship GPU chips it had no current plans to do so, because traditional copper connections were "orders of magnitude" more reliable than today's co-packaged optical connections.

"That's not worth it," Huang said of using optical connections directly between GPUs. "We keep playing with that equation. Copper is far better."

Huang said that he was focused on providing a reliable product roadmap that Nvidia's customers, such as OpenAI and Oracle, could prepare for.

"In a couple years, several hundred billion dollars of AI infrastructure is going to get laid down, and so you've got the budget approved. You got the power approved. You got the land built," Huang said. "What are you willing to scale up to several hundred billion dollars right now?"

Silicon Valley entrepreneurs and investors have pinned their hopes on the optics technology, which they believe will be central to building ever-larger computers for AI systems, which Huang said on Tuesday would still be necessary even after advances by companies like DeepSeek because AI systems would need more computing power to think through their answers.

Startups such as Ayar Labs, Lightmatter and Celestial AI have raised hundreds of millions of dollars in venture capital - some of it from Nvidia itself - to try and put co-packaged optical connections directly onto AI chips. Lightmatter and Celestial AI are both targeting public offerings.

Copper connections are cheap and fast, but can only carry data a few meters at most. While that might seem trivial, it has had a huge impact on Nvidia's product lineup over the past half decade.

Nvidia's current flagship product contains 72 of its chips in a single server, consuming 120 kilowatts of electricity and generating so much heat that it requires a liquid cooling system similar to that of a car engine. The flagship server unveiled on Tuesday for release in 2027 will pack hundreds of its Vera Rubin Ultra Chips into a single rack and will consume 600 kilowatts of power.

Cramming more than double the number of chips into the same space over two years will require massive feats of engineering from Nvidia and its partners. Those feats are driven by the fact that AI computing work requires moving a lot of data back and forth between chips, and Nvidia is trying to keep as many chips as it can within the relatively short reach of copper connections.

Mark Wade, the CEO of Ayar Labs, which has received venture backing from Nvidia, said the chip industry was still navigating how to manufacture co-packaged optics at lower costs and with higher reliability. While the transition may not come until 2028 or beyond, Wade said, the chip industry will have little choice but to ditch copper if it wants to keep building bigger and bigger servers.

"Just look at the power consumption going up and up on racks with electrical connections," Wade told Reuters in an interview on the sidelines of Nvidia's conference. "Optics is the only technology that gets you off of that train."