Big Tech’s profits sparked. There are reasons to be concerned about what comes next.

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Big tech stocks keep getting bigger. Their market caps, not so much.

Last week, the top five tech companies in the world—

Apple

(ticker: AAPL),

Microsoft

(MSFT),

Amazon.com

(AMZN),

Alphabet

(Google T

Facebook

(FB) —all published quarterly results. Their collective performance was amazing. As a group, their revenues increased 36% to $ 332 billion. These companies spent money during the pandemic.

But investors weren’t impressed. While Alphabet was up 1.3% for the week, the rest were all down. Amazon received the worst reception; its stock fell 7.6% on Friday. With all five hovering near all-time highs, investors are taking profits fearing growth rates will slow from here. Beneath the surface, the concerns are well founded. Here are the main takeaways from Big Tech’s huge income:

The pandemic boom is over. That’s not to say the pandemic itself is over – the Delta variant is wreaking havoc – but Americans have already changed their behavior, and these adjustments are having a major impact on the tech giants.

It starts with e-commerce. Amazon CFO Brian Olsavsky said during the company’s earnings call that from mid-May, e-commerce sales growth fell to half of the 30 range. % to 40%. People get vaccinated and leave home to buy things they would have bought online just a few months ago. They also transfer some of their disposable income from online shopping to travel, restaurants, and even events. Olsavsky sees tough and ongoing comparisons for Amazon – and midteens growth rates – for the next few quarters.

Apple has exceeded expectations in all of its segments, but growth is also slowing there. Mac sales rose 16% in the June quarter, down from 70% growth three months earlier. IPad sales rose 12%, up from 79% in March. All of this is even better than before the pandemic, but it suggests that the furious shopping spree for home offices and virtual education is coming to an end.

Logitech

(LOGI), which makes PC peripherals like mice and webcams, saw revenue growth of 66% in the June quarter, but sees stable revenue for its fiscal year ending March 2022.

Component shortages continue. The biggest market issue with Apple’s quarter was its warning that the chip supply shortage had worsened since late June and that the issue would affect the availability of iPads and, worse yet, iPhones. In September, Apple is expected to release the iPhone 13 and there is a risk that Apple will not be able to meet demand.

Qualcomm

(QCOM) warned last week that the chip shortage could extend until 2022. It could take some time to correct.

Meanwhile, Apple CEO Tim Cook said during the company’s earnings call that shipping costs are also higher. I saw proof of that from my seat at a San Francisco Giants game last week. Looking beyond McCovey Cove towards the San Francisco Bay, there were at least a dozen container ships lined up to enter the Port of Oakland, which saw an 11% increase in cargo volume at first semester. The port is partly safeguarded due to a shortage of dockworkers. Freight rates are at record highs and the holiday season is fast approaching, increasing demand for freight capacity.

Online advertising is hot. On a brighter note for investors, Alphabet’s advertising activity grew 68% in the last quarter, including an 84% jump in YouTube advertising. Facebook’s advertising activity grew 56%, driven by a 47% year-over-year increase in ad prices. Amazon’s “other” revenue category, mostly from ads, grew 87% to $ 7.9 billion, nearly a billion better than Wall Street estimates. Apple doesn’t advertise, but the strength of advertising has helped the company’s service business grow 33%. Microsoft saw a 53% jump in search ads (remember Bing?) And a 97% jump in advertising on LinkedIn. Everything stems from the reopening of the economy. Alphabet told analysts the main driver of advertising growth was retail, with strong contributions from travel, financial services, media and entertainment. People shop, eat out, and go on vacation, which generates ads.

Cloud adoption is accelerating. The digital transformation trend that everyone in enterprise IT is talking about is the real deal. For Amazon, slowing e-commerce growth eclipsed a fantastic quarter for its Amazon Web Services cloud unit, which grew 37%, from 32% in the March quarter, to $ 14.8 billion. It was $ 500 million better than estimates. Microsoft Azure revenue rose 51%, beating the Wall Street consensus by nine percentage points. Alphabet saw 54% growth in its Google Cloud business, following growth of 46% in the March quarter. Google Cloud is quickly approaching $ 20 billion in annual revenue. Give it a cloud-like sales multiple of 20 times and the company is worth $ 400 billion, which is over 20% of Alphabet’s current market value.

The Joker. Regulators and lawmakers scrutinizing Big Tech are surely examining the latest findings and finding a new sense of purpose. The big ones get bigger. And regulatory risks are increasingly risky.

Write to Eric J. Savitz at [email protected]