The pandemic hasn’t put a dent into Big Tech’s dominance. Instead, the social upheaval has only reinforced it, with the five biggest tech companies on the planet — Apple, Amazon, Microsoft, Facebook and Alphabet (Google’s parent company) — all reporting massive profits and sales during the first quarter of 2021.
Combined, those companies reported net income of $74.5 billion this earnings season — more than double what they earned just a year ago during the same time period — with Alphabet, Amazon and Microsoft all hitting new company records quarterly profits.
Facebook and Apple, meanwhile, reported their second-best quarters ever in terms of net income (both companies had their best quarters ever between October and December of last year). The chart below gives a better look at Big Tech’s record-setting profits:
(Please note that, for simplicity, the January-March quarter has been referred to as Q1 for all companies noted, although some have different fiscal calendars. Apple, for instance, refers to this period as its second quarter.)
All five of these companies had huge first quarters, but they took different roads to get there. For Alphabet and Facebook, digital ad revenue accounted for most of the sales. (Google, with sales increasing 32% year-over-year, and Facebook, with sales jumping 46% from 2020, both had their best quarters in years in terms of sales growth.)
For Amazon, revenue jumped 44% year-over-year to $108.5 billion, as e-commerce sales continued to benefit from more people ordering items online during the pandemic. Amazon reported strong growth elsewhere, too, including for its cloud services division, which posted $13.5 billion in sales — up 32% over the last year. Amazon CEO Jeff Bezos even bragged that 175 million people streamed a show or movie on Prime Video in the last year, showing it benefited from a pandemic streaming boost like several other services.
Apple’s $23.6 billion in net income, meanwhile, was spurred by increased demand for the iPhone, its linchpin device. That profit was due to more than just iPhone sales, though, as Apple also reported record Mac sales — which soared 70% to $9.1 billion in quarterly revenue — as well as record sales for its Services sector, which includes Apple Music and App Store contributions.
Overall, it was a “drop the mic” quarter for Apple, as Wedbush analyst Dan Ives said in a note to clients on Wednesday. He also pointed out that the iPhone continues to make inroads in China — leading him to believe Apple’s glory days won’t be slowing down anytime soon.
“Geographically speaking China (up 87.5% YoY) was a major star of the show as their demand remains a linchpin to our Apple bull thesis,” Ives said. “China remains a key ingredient in Apple’s recipe for success as we estimate roughly 20% of iPhone upgrades will be coming from this region over the coming year. To this point, we are seeing considerable strength from the China region thus far with positive trends continuing into 2021.”
For another angle at Big Tech’s big quarter, here’s a look at quarterly sales:
Taking a step back, none of this should be surprising, necessarily. The sheer size of Big Tech’s profits and sales are obviously eye-catching, but the current environment was tailor-made for these companies to succeed. More people are ordering items online, helping boost e-commerce sales; more people are spending times on their phones, helping boost digital ad sales and app purchases; and more people are working from home, helping boost Mac and other device sales.
Simply put: Big Tech, compared to many businesses struggling simply to stay afloat right now, was better positioned to not only weather the pandemic, but thrive during it — for better or for worse.