CEO of Meta and Facebook Mark Zuckerberg, Lauren Sanchez, Amazon founder Jeff Bezos, Google CEO Sundar Pichai and Tesla and SpaceX CEO Elon Musk attend the inauguration ceremony before Donald Trump is sworn in as the 47th US President in the US Capitol Rotunda in Washington, DC, on Jan. 20, 2025.
Saul Loeb | Via Reuters
The strengthening dollar is posing challenges for the biggest U.S. tech companies, which have become increasingly reliant on overseas revenue. With other currencies weakening, money made elsewhere is worth less when converted into dollars.
Amazon should suffer less than its megacap peers as the e-commerce giant generates a higher percentage of sales in the U.S. However, in its fourth-quarter earnings report on Thursday, Amazon said foreign exchange rates are to blame for the company’s weaker-than-expected first-quarter forecast and the possibility of its slowest revenue growth on record.
Revenue in the current quarter will land between $151 billion and $155.5 billion, suggesting annual growth of just 5% to 9%. Amazon’s slowest quarter for growth came in mid-2022, when revenue increased by 7.2%.
“This guidance anticipates an unusually large, unfavorable impact of approximately $2.1 billion, or 150 basis points, from foreign exchange rates,” Amazon said in the earnings release.
On its earnings call that followed, Amazon said it saw $700 million “more of foreign exchange headwind than we anticipated” in the fourth quarter. During the period, international revenue totaled $43.4 billion, or 23% of overall sales.
At Apple, roughly 58% of revenue came from overseas in the latest period. For Meta, it was 55%, Alphabet reported about 52%, Microsoft slightly under 50% and Tesla just over 50% for all of 2024.
The U.S. dollar index — which measures the greenback against a basket of rivals — hit its highest level in more than two years last month, ahead of President Donald Trump’s inauguration. The dollar climbed steadily from late November through mid-January and has since fallen slightly.
The dollar may be particularly volatile in the coming weeks and months due to uncertainties surrounding Trump’s tariff policies and the threat of a trade war, most notably China, along with a lack of clarity about U.S. foreign policy, given comments Trump has made about potentially trying to take over Greenland and Gaza.
Here’s what other companies had to say on the topic of foreign exchange in issuing their financial results.
Microsoft CFO Amy Hood said foreign exchange did “not have a significant impact on our results and was roughly in line with expectation,” though for the current quarter it would bring down revenue growth by “more than 1 point.”
Susan Li, Meta’s finance chief, said the company expects “a three-point headwind in Q1” after foreign exchange “approximately neutral to revenue in Q4, just with the dollar strengthening, in particular against the euro.”
Alphabet CFO Anat Ashkenazi said investors can “expect a larger headwind to our revenues from the strengthening of the U.S. dollar relative to key currencies in Q1 versus Q4 2024.”
Apple finance chief Kevan Parekh warned last week that, “As the dollar strengthens significantly, we expect foreign exchange to be a headwind and to have a negative impact on revenue of about 2.5 percentage points on a year-over-year basis.”
The rise of the dollar will lead investors to pay close attention to job numbers out on Friday. When the Bureau of Labor Statistics releases its nonfarm payrolls count for January, it’s projected to show growth of 169,000, down from 256,000 in December, but nearly in line with the past three-month average. The unemployment rate is projected to stay at 4.1%, according to the Dow Jones consensus for the report.
After that, the the tech industry will wait to see what Nvidia has to say about foreign exchange when the chipmaker reports earnings later in February. In the period ending in October, Nvidia generated about 58% of its revenue from outside the U.S.
The logo of Japanese company SoftBank Group is seen outside the company’s headquarters in Tokyo on January 22, 2025.
Kazuhiro Nogi | Afp | Getty Images
A sector-wide pullback hit Asian chip stocks Friday, led by a steep decline in SoftBank, after Nvidia‘s sharp drop overnight defied its stronger-than-expected earnings and bullish outlook.
SoftBank plunged more than 10% in Tokyo. The Japanese tech conglomerate recently offloaded its Nvidia shares but still controls British semiconductor company Arm, which supplies Nvidia with chip architecture and designs.
SoftBank is also involved in a number of AI ventures that use Nvidia’s technology, including the $500 billion Stargate project for data centers in the U.S.
South Korea’s SK Hynix fell nearly 10%. The memory chip maker is Nvidia’s top supplier of high-bandwidth memory used in AI applications. Samsung Electronics, a rival that also supplies Nvidia with memory, fell over 5%.
Taiwan’s Hon Hai Precision Industry, also known as Foxconn, which manufactures server racks designed for AI workloads, dipped 4%.
The retreat in major Asian semiconductor giants comes after Nvidia fell over 3% in the U.S. on Thursday, despite beating Wall Street expectations in its third-quarter earnings the night before.
The company also provided stronger-than-expected fourth-quarter sales guidance, which analysts said could lift earnings expectations across the sector.
However, smaller chip players in Asia were not spared either.
In Tokyo, Renesas Electronics, a key Nvidia supplier, fell 2.3%. Tokyo Electron, which provides essential chipmaking equipment to foundries that manufacture Nvidia’s chips, was down 5.32%.
Another Japanese chip equipment maker, Lasertec, was down over 3.5%.
An electric air taxi by Joby Aviation flies near the Downtown Manhattan Heliport in Manhattan, New York City, U.S., November 12, 2023.
Roselle Chen | Reuters
Air taxi maker Joby Aviation in a new lawsuit accused competitor Archer Aviation of using stolen information by a former employee to “one-up” a partnership deal with a real estate developer.
“This is corporate espionage, planned and premeditated,” Joby said in the lawsuit filed Wednesday in a California Superior Court in Santa Cruz, where the company is based.
Archer and Joby did not immediately respond to CNBC’s request for comment.
The lawsuit alleges that former U.S. state and local policy lead, George Kivork, downloaded dozens of files and sent some content to his personal email two days before he resigned in July to take a job at Archer, which had recruited him.
By August, Joby said a partner that worked with Kivork said it had been approached by Archer with a “more lucrative deal.” Joby alleges that the eVTOL rival’s understanding of “highly confidential” details helped it leverage negotiations.
Joby also said the developer attempted to terminate the agreement, citing a breach of confidentiality.
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Kivork refused to return the files when Joby approached him after conducting an investigation, according to the suit. The company also said Archer denied wrongdoing, and would not disclose how it learned about the terms of the agreement or provide results from an internal investigation it allegedly undertook.
The lawsuit comes during a busy period for electric vertical takeoff and landing (eVTOL) technology as companies race to gain Federal Aviation Administration certification to start flying commercially. ‘
Joby argued in the complaint that it’s “imperative” to protect Joby’s work “from this type of espionage” to promote the sector’s success and ensure fair competition.
Last week, Joby said it completed its first test flight for a hybrid aircraft it’s working on with defense contractor L3Harris. This month, Amazon-backed Beta Technologies, another electric flight company, also went public on the New York Stock Exchange.
Joby shares have more than doubled over the last year, while Archer is up about 68%.
In August 2023, Archer settled a previous legal dispute with Boeing-owned Wisk Aero over the alleged theft of trade secrets. As part of the deal, Archer agreed to use Wisk as its autonomous tech partner.
Every weekday, the CNBC Investing Club with Jim Cramer releases the Homestretch — an actionable afternoon update, just in time for the last hour of trading on Wall Street. Markets : There was an ugly reversal in the market Thursday. Stocks soared for most of the morning in reaction to Nvidia ‘s strong quarter, bullish outlook on AI spending, and pushback that customers weren’t generating a sufficient return on their investment. Nvidia shares climbed as high as $196 on Thursday — a roughly 5% gain — and its gravitational pull helped lift other technology and AI-adjacent industrial stocks. The market’s gains pushed the S & P 500 into positive territory for the week. However, around 11 a.m. ET, the market began to fall rapidly, with technology and industrial names leading the decline. Nvidia gave up all of its gains and dropped 2%. Bitcoin hit its lowest level since late April. Notable defensive stocks like consumer staples held onto their gains, though. That resilience reinforces our decision to diversify further, which we did earlier this week , by adding Procter & Gamble to the portfolio. The S & P 500’s decline has pushed the index back toward the lows of its recent downturn, marking a roughly 5% pullback from its high. It remains to be seen whether Thursday’s reversal is a sign of investors continuing to retreat from risk assets or simply a retest of the recent downdraft. But Nvidia’s earnings report gave zero indication of a slowdown in demand for AI compute. Interest rate cut: Expectations for a 25-basis-point rate cut at the Federal Open Market Committee’s next meeting in December continue to fluctuate. One month ago, a rate cut seemed like a sure thing with a 98.8% probability, according to the CME FedWatch Tool . But the odds dropped to about 50% a week ago after a slew of hawkish commentary from Federal Reserve members. On Wednesday, the odds of a cut plummeted to 30% after the release of the October Fed minutes, which showed that the central bank was hesitant to lower rates again this year. But after the long-delayed September jobs data finally came out Thursday, the probability of a 25-basis-point reduction jumped to 40%. Although the economy added 119,000 jobs in September, more than double the forecasted figure, the unemployment rate ticked higher. The Fed is in a bind, trying to balance a softening labor market against the risk that a rate cut could reignite inflation. Up next: Gap, Ross Stores , Intuit , and Veeva Systems report after the closing bell. BJ’s Wholesale Club will post results Friday morning. On the economic data side, tomorrow we’ll get November’s S & P Global Flash PMI for Manufacturing and Services, along with the University of Michigan’s consumer sentiment survey. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.