What is this, revenue growth for ants?

Or: Big tech companies are more cloud-dependent than you thought

It’s earnings season, that time of the quarter when we get to judge how well public tech firms are fulfilling all the lofty promises they’ve been making. So far this week, we’ve heard from Microsoft and Alphabet (Google) and Meta (Facebook), among other names.

While results from companies like Roku and Spotify hold interesting information about particular segments of the consumer tech market and the health of advertising demand more generally, the sheer extent of Big Tech’s reach means their results bring a sheaf of color to our understanding of the current tech and business worlds.

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What have the majors shown us this week? The most important trend we’ve gleaned from three of the American big five (we’ll hear from Amazon later today and Apple next week) is their very moderate pace of trailing growth.

Investors were largely mollified, if not downright pleased, by these results. Both Alphabet and Microsoft are each up a few points in early trading, and Meta is up nearly 15% after it managed to pleasantly surprise investors, who expected it to post another quarter of slowing revenues.

We’ve spilled more ink than I want to recall covering investors’ new preference for more profitable growth instead of crazy, unprofitable growth. Mostly, we’ve discussed that in reference to startups, but in the case of these tech giants, things get a bit more nuanced. That said, it’s clear that trimming costs and investing in growth are efforts that make investors happy.

3%, 3%, 7%

Given that we often hear of startups bearing growth expectations in the triple-digits, it may be surprising to assume that roughly $4 trillion in market cap across three companies could be defended with revenue growth in the single-digits, but here we are.

Alphabet’s 3% rise in revenue was driven by Google Cloud’s top line increasing to $7.5 billion from $5.8 billion a year earlier. Search grew by less than $1 billion to $40.4 billion, while Google Network and YouTube advertising incomes dipped.