Headline Earnings Results from FANG+ Stocks

US mega caps have been the start of the 2023 Q4 earnings season show. Year-to-date, more than 85% of the S&P 500’s gains have been driven by members of the NYSE FANG+ Index, up from 60% in 2023.1 Below, Global X explores the results from the December 2023 quarter for eight of the top companies in the index.


Google recorded US$86.3 billion in revenue, beating expectations of US$85.3 billion. CEO, Sundar Pichai said, “We are pleased with the ongoing strength in Search and the growing contribution from YouTube and Cloud. Each of these is already benefiting from our AI investments and innovation. As we enter the Gemini era, the best is yet to come.” Google Cloud outperformed with a 25% growth in revenue to US$9.2 billion against US$8.9 billion expected.2 Meanwhile, YouTube ads lifted to US$9.2 billion from US$7.9 billion YoY.3


Amazon’s revenue grew 14% YoY to US$170 billion beating analyst forecasts of US$166.2 billion. Net income soared to US$10.6 billion in the quarter, up from only US$0.3 billion in the previous corresponding period.4 AWS, Amazon’s most profitable unit, generated US$24.2 billion, in-line with expectations.5 CEO, Andy Jassy said, “AWS’s continued long-term focus on customers and feature delivery, coupled with new genAI capabilities like Bedrock, Q, and Trainium have resonated with customers and are starting to be reflected in our overall results … As we enter 2024, our teams are delivering at a rapid clip, and we have a lot in front of us to be excited about.”6


Apple had a fruitful quarter. Revenue lifted 2% to US$119.6 billion and earnings per diluted share popped 16% US$2.18 YoY.7 CEO, Tim Cook said iPhone sales and all-time high services revenue fueled the result which largely beat Wall Street’s expectations. “We are pleased to announce that our installed base of active devices has now surpassed 2.2 billion, reaching an all-time high across all products and geographic segments. And as customers begin to experience the incredible Apple Vision Pro tomorrow, we are committed as ever to the pursuit of groundbreaking innovation — in line with our values and on behalf of our customers,” Cook told investors.8


Year-over-year, the company’s quarterly profit tripled to US$14 billion, smashing analyst forecasts of US$13 billion, and revenue jumped almost 25% from US$32 billion to US$40 billion.9 Investors seemed thrilled by the report – Meta rallied 20% on the day, adding US$197 billion to its market cap, and notching the biggest single session rise ever in any company’s valuation.10,11 Ironically, exactly two years ago, Meta had recorded the biggest single session loss ever (US$251 billion) – making Meta’s recovery one of the greatest comeback stories in Wall Street history.12


Microsoft’s revenue came in at US$62 billion to top analyst expectations of US$61.1 billion. Operating income and net income both increased by 33%, equaling US$27 billion and $21.9 billion respectively.13 Intelligent cloud, which includes Azure and Microsoft’s new AI suite, grew 19% YoY and brought in US$25.8 billion in revenue, beating analyst estimates.14 Microsoft’s long-awaited acquisition of gaming giant, Activision Blizzard, was also detailed in this quarter’s earnings. AI was a hot topic for Microsoft with Satya Nadella, chairman and chief executive officer, saying the company “moved from talking about AI to applying AI at scale… By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”15


Netflix had one of its most successful quarters ever. The streaming giant’s earnings revealed it added more than 13 million subscribers in the three-month stretch – crushing analyst predictions of 8.7 million and marking its biggest surge in subscriptions since COVID lockdowns in Q1 2020.16 On the financial side, the company cashed in US$8.8 billion in revenue, its strongest sales period on record, and comfortably met market expectations.17 Netflix’s earnings capped off an impressive year of recovery for the streaming company. In 2022, Netflix suffered a brutal 75% sell-off after reporting a loss in userbase for the first time in its history.18 This year, Netflix’s total revenue and profit rose to US$33.7 billion and US$5.4 billion respectively – both by-far the best results in company history – while its total userbase crossed 260 million, almost ten times the total population of Australia.19


Nvidia continued to impress, surpassing bottom- and top-line expectations. Quarterly revenue hit US$22.1 billion, up 22% from Q3 and 265% from the previous year.20 Meanwhile, EPS reached 5.16%.21 The company’s datacentre revenue is the number to watch. Q4 numbers came in at US$18.4 billion, beating analyst estimates by around 7%, and up 408% YoY.22 The company overall has grown revenue by 125% over the past year, and datacentre revenue has risen from ~55% of total revenue to over 75%. The negative part of the earnings was Chinese sales, which have fallen significantly since the US implemented restrictions to prevent the export of AI chips to China. Still, the stock rallied 10-20% in aftermarket trading. Jensen Huang, founder and CEO of Nvidia said, “accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries and nations.”23


Tesla’s share price has been in decline since reaching record highs towards the end of 2021 and its latest results did little to stem investor concerns. Earnings per share (EPS) missed expectations by 5%.24 YoY, total gross profits fell 23% from US$5.7 billion to US$4.4 billion, income from operations dropped 47% from US$3.9 billion to just over US$2 billion, and its operating margins were squeezed from 16% down to 8.2%.25 During 2023 Tesla cut prices on a number of models to bolster sales, but this negatively impacted profits. Another concern is Tesla’s waning market share in China which is responsible for almost 60% of global EV purchases.26 On the day Tesla announced its results shares tumbled 12%, shedding around US$80 billion off its market cap.

Until Next Earnings Season

Off the back of these results, the Nasdaq and S&P 500 hit record highs in late February, with these mega cap companies at the centre of the rally. But which stocks will reign supreme until the next earnings season and beyond? Given the backdrop of enduring economic strains, geopolitical tensions, and a shifting technology environment, it is becoming increasingly difficult to select individual stocks. ETFs that capture these companies can be an accessible solution for Australian investors. For instance, the Global X FANG+ ETF (ASX: FANG) holds ten top the top next-gen tech companies – including all of the stocks mentioned above. To understand the broader, structural trends which may propel these companies into the future, read “Monopolies Have Changed: Why the FANG+ Are Built Different“.