In the latest wave of earnings from the Nasdaq Composite Index (NASDAQ: .IXIC) companies, high-flying US tech giants Tesla Inc (NASDAQ: TSLA) and Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) delivered their 2Q FY24 earnings overnight.
Let's explore what these members of the magnificent seven reported overnight.
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Tesla's profits dropped by 45%
Electric vehicle (EV) maker Tesla's 2Q FY24 results came below market expectations, pushing its share price down. Here's a summary of its headline numbers:
- Revenue of US$25.5 billion, up 2% from a year ago
- Operating profit of US$1.61 billion, up 26% from a year ago
- Net profit after tax (NPAT) of US$1.48 billion, down 45% from a year ago
- Earnings-per-share (EPS) of 42 cents, down from 78 cents a year ago.
- Global EV deliveries of 443,956, down 5% from a year ago.
Tesla reported a US$622 million restructuring charge. Adjusting for the restructuring and other charges, its NPAT was US$1.81 billion, down 42% from a year ago.
The company reported weaker-than-expected 2Q FY24 results, hit by slower demand and increased competition. While total automotive revenues declined by 7% to US$19.88 billion in the quarter, energy storage sales and a rise in regulatory credit sales offset the EV weakness, leading to a 2% revenue increase.
Operating margin fell to 6.3%, down from 9.6% a year ago. Adjusted EPS of 52 cents missed analysts' expectations.
The company said, "The 2024 vehicle volume growth rate may be notably lower than the growth rate achieved in 2023." In light of anticipated weakness in EV sales, Tesla aims to implement innovations to reduce manufacturing and operations costs, including using artificial intelligence (AI).
Tesla shares were down 7.8% in the after-hours trading session after releasing 2Q FY24 results.
Alphabet reported softer growth
Google parent Alphabet reported 2Q FY24 earnings after the US market close. Key numbers are as follows:
- Revenue of US$84.7 billion, up 14% from a year ago
- Operating profit of US$27.4 billion, up down 33% from a year ago
- NPAT of US$23.6 billion, up 29% from a year ago
- EPS of $1.89, up from $1.44 a year ago.
Google's ad sales growth slowed in 2Q FY24, impacting its post-pandemic recovery. Alphabet reported $64.6 billion in Google ad sales in the quarter, up 11.1% from a year ago but a sequential decline from 1Q FY24's 13% growth. YouTube ad sales rose 13% to $8.7 billion but also saw a decelerating growth rate. Total revenues grew 13.5% to $84.7 billion, slower than the previous quarter's growth rate.
Net income was $23.6 billion, up 28.6% year-over-year. Talks to buy cybersecurity startup Wiz for $23 billion fell through, and Google reversed plans to remove cookies from Chrome, opting to prompt users to turn them off instead.
Capital expenditures surged 91% to $13.2 billion, driven by data centre and AI chip investments. Alphabet's results met analysts' revenue expectations of $84.2 billion and exceeded net income expectations of $22.9 billion.
Alphabet shares were down 2.2% in the after-hours trading, post-releasing earnings.
