February 23, 2024


Or: Big tech companies are more dependent on the cloud than you think

It’s earnings season, that’s the time in the quarter when we can judge how well public tech companies are delivering on all the lofty promises they’ve made. So far this week, we’ve heard from companies like Microsoft and Alphabet (Google) and Meta (Facebook).

While results from the likes of Roku and Spotify contain interesting information about specific segments of the consumer tech market and the health of advertising demand more generally, the breadth of Big Tech’s reach means their results add to our understanding of current technology. A lot of color and the business world.


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What did the pros show us this week? The most important trend we glean from three of the Big Five in the US (we’ll hear from Amazon later today and Apple next week) is their very modest trailing growth rates.

Investors were largely reassured, if not terribly happy, about these results. Alphabet and Microsoft each rose a few points in early trading, while Meta rose nearly 15% after surprising investors, with investors expected It posted another quarter of slower revenue.

We’ve said more ink than I can recall, covering investors’ new preference for more profitable growth over wild, unprofitable growth. Mostly, we’ve talked about startups, but when it comes to these tech giants, things get more nuanced. That said, it’s clear that cutting costs and investing in growth is an effort to keep investors happy.

3%, 3%, 7%

Given how often we hear about triple-digit growth expectations for startups, it might be surprising to assume that the roughly $4 trillion market capitalization of the three companies can be defended with single-digit revenue growth, but there we are.

Alphabetical 3% revenue growth That was boosted by Google Cloud’s revenue rising to $7.5 billion from $5.8 billion a year ago. Search rose by less than $1 billion to $40.4 billion, while Google Network and YouTube ad revenue declined.