1. Summary

• Under the overall correction of the market, overseas technology giants have reached the valuation center of 18 times forward PE.

For a long time, the long-term valuation center of the capital market for the technology giants remains relatively stable: for the more mature platform technology enterprises, although their PE multiple changes greatly in the current year with different development stages and different cycles, their long-term PE actually remains relatively stable.

Taking into account the necessary rate of return in the market, and the current PE23E should be slightly higher than the average PE23E in 18-21. In fact, for Alphabet Inc-CL C, Apple Inc, Microsoft Corp and domestic Tencent, JD.com, Baidu, Inc. and other companies are consistent. And the current discount of Meta, BABA, Netflix and other companies, may be mainly due to the sharp reduction in Bloomberg consensus expectations in the past two quarters, the market gives more discounts.

The valuation centers of Internet companies at home and abroad tend to be the same, and the market gives the ownership of operating systems (Apple Inc and Microsoft Corp) a premium: from the valuation center of Internet companies at home and abroad, the whole is basically 18 times in 23 years. Only Apple Inc (24 times), Amazon.Com Inc (29 times) and Microsoft Corp (25 times) have a relatively stable premium. Other technology companies have returned to the 18-fold hub of PE23E.

• From a fundamental point of view: customer structure and moat determine resilience in the face of inflation and supply chain headwinds

In the face of inflation, consumer demand and the headwind of the supply chain, the growth resilience of tech giants continued to be tested this quarter. In the long run, the headwind test reflects more:

1) the efficiency of enterprise operation and capital operation; 2) the status of industrial chain and bargaining power; 3) the mental status of consumers and the ability to maintain market share.

• For tech giants, the market is focused on trading:

1) whether the Fed's interest rate cut will lead to an early recession; 2) where the tech giants should be under the investment clock when the recession comes; and 3) whose product matrix and customer structure are healthier when the purchasing power of individuals and companies is impaired.

On the financial side, the tech giants still have some support from their relatively healthier cash flow and ongoing buyback programs under the hidden worries of the recession. For example, Alphabet announced a $70 billion repurchase this quarter, and Amazon.Com Inc announced last quarter that it would start buybacks for the first time in years, totaling no more than $10 billion.

Valuation: under the overall correction of the market, overseas technology giants have 18 times the forward PE valuation center.

• 1. In the long run, the capital market's long-term valuation center for technology giants remains relatively stable.

For the more mature platform enterprises, although the PE multiple changes greatly in the current year with different development stages and different cycles, their long-term PE actually remains relatively stable. For example, Meta (Facebook Inc), according to the PS and TTMPE of the financial year, the current relative valuation (13.7x PE) is quite different from the 18-21-year average (28x PE).

But based on the market capitalization of Meta for each trading day and the 23-year profit expected by Bloomberg on that trading day, PE23E actually fluctuated at a central level of 12-14 times in 18-22. Taking into account the necessary rate of return in the market, the current PE23E should be slightly higher than the average PE23E in 18-21.

In fact, for Alphabet Inc-CL C, Apple Inc, Microsoft Corp and domestic Tencent, JD.com, Baidu, Inc. and other companies are consistent. And the current discount of Meta, BABA, Netflix and other companies, we think may be mainly due to the sharp reduction in Bloomberg consensus expectations in the past two quarters, the market gives more discounts.

• two。 The valuation centers of technology platform companies at home and abroad tend to be consistent, and the market gives a premium for owning operating systems (Apple Inc and Microsoft Corp).

From the valuation center of domestic and foreign companies in the selected range, the whole is basically 18 times in 23 years, and only Apple Inc (24 times), Amazon.Com Inc (29 times) and Microsoft Corp (25 times) have a relatively stable premium. Such companies have returned to the 18-fold hub of PE23E.

Fundamentals: customer structure and moat determine resilience in the face of inflation and supply chain headwinds?

In the face of inflation, consumer demand and the headwind of the supply chain, the growth resilience of tech giants continued to be tested this quarter. In the long run, the headwind test reflects: 1) the efficiency of enterprise operation and capital operation; 2) the status of industrial chain and bargaining power; 3) the market position in the hearts of consumers and the ability to maintain market share.

Amazon.Com Inc's profit was most seriously affected by the headwind: due to the high proportion of logistics costs (especially the cost of oil) in the cost of its e-commerce business, the net profit was much lower than the consensus forecast, and the gross profit margin of the e-commerce business turned negative. The impact of enterprise cloud computing demand has not yet been reflected. Amazon Cloud, Alphabet Inc-CL C Cloud and Microsoft Corp Cloud continued to maintain a high income growth rate this quarter. Apple Inc and Microsoft Corp as a whole continued to slightly exceed expectations. Among them, the number of large orders of Microsoft Corp's major customers is still increasing rapidly.

We think that for tech giants, the market is focused on trading:1) whether the Fed's interest rate cut will lead to an early recession; 2) where the tech giants should be under the investment clock when the recession comes; and 3) whose product matrix and customer structure are healthier when the purchasing power of individuals and companies is impaired.

We believe that in terms of capital, under the hidden worries of the recession, the tech giants still have some support with their relatively healthier cash flow and ongoing repurchase programs. For example, Alphabet announced a $70 billion repurchase this quarter, and Amazon.Com Inc announced last quarter that it would start repurchase for the first time in many years, totaling no more than $10 billion.

• Apple Inc Quarterly report comments: the core competitive advantage is reflected in stronger resilience than counterparts in the consumer electronics industry.

Apple Inc: we think that the core competitive advantage of Apple Inc Company is:

1) the strong ecosystem and user stickiness built by the integration of soft (iOS) and hardware (from the whole machine to the chip) 2) the maximum common divisor of consumer demand can be led by a small number of models, thus greatly reducing the development cost and the difficulty of supply chain management. 3) an open corporate culture of continuous innovation.

We believe that in this quarter, the advantage of the ecosystem continues to be reflected in software revenue, while the ability to control the supply chain is reflected in Apple Inc's ability to supply products.

Revenue in the second quarter hit a record again, exceeding market expectations. On April 29th, 2022, Apple Inc released the second quarterly report of fiscal year 2022:

Apple Inc achieved an operating income of 97.278 billion US dollars, an increase of 9 per cent over the same period last year. Gross profit was $42.559 billion, an increase of 11.77% over the same period last year.

IPhone revenues hit record highs (+ 5 per cent), driving strong double-digit growth in results and earnings per share, with Mac (up 15 per cent year-on-year), wearables (up 12 per cent) and services (up 17 per cent).

Affected by severe supply constraints, iPad revenue fell 2% year-on-year, mainly due to the high base of ipad demand since the epidemic, and the growth rate of 2022 flat panel demand slowed down.

The overall demand is strong, and the ability of supply chain management can basically ensure hardware supply and stable sales. The software and services business generated a record $19.8 billion in revenue, AppStore, music, cloud services and AppleCare all set records, video, advertising and payment services also set a record for the quarter in March, and paid subscriptions grew strongly.

Wearing an AR device may become a new growth curve in the future. According to the report, Apple Inc's new generation of AR headset has been displayed by the board of directors. We believe that the market in the next quarter should be mainly concerned with:

1) the marginal impact of the supply chain on production capacity; 2) the resilience of Apple Inc's products in the generally upwind consumer electronics market; and 3) news about a new generation of headsets or further smart car plans.

• Microsoft Corp Quarterly report comments: cloud computing usage of Tier1 customers is still increasing.

Revenue and net profit slightly exceeded Bloomberg's expectations.The company achieved a total revenue of 49.4 billion US dollars, an increase of 18% over the same period last year. Net profit: realized net profit of US $16.7 billion, an increase of 8% over the same period last year, and net interest rate of 33.89%. The diluted EPS of Q3 is $2.22.

By business: productivity and business process business revenue was $15.8 billion, an increase of 17% year-on-year, mainly driven by the growth of paid Office seats and Dynamics growth.

Revenue from smart cloud business was $19.1 billion, up 26% year-on-year, and revenue exceeded expectations. Among them, Azure revenue increased by 46% over the same period last year, excluding the impact of exchange rate, increased by 49% over the same period last year, and continued to maintain rapid growth.

Revenue from the personal computing business was $14.5 billion, up 11% from a year earlier. The search business and Windows business performed strongly this quarter. The news collection function of Start, which Windows added to the start menu, is gradually opening up a new path to commercialization of advertising. The company's Xbox became the market leader in North America and Europe in the quarter, with the Azure cloud games business growing 66% year-on-year.

The company's guidance for the next quarter is slightly better than expected: productivity business and personal computing business are growing steadily, while smart cloud business is growing at a high speed. Productivity and business process business revenues range from $16.65 billion to $16.9 billion. Smart cloud revenue is between $21.1 billion and $21.35 billion, while Azure's revenue growth slows by about 2 per cent at constant exchange rates. Revenue from the personal computing business is expected to be between $14.65 billion and $14.95 billion.

Our point of view is:

1) regardless of inflation, cloud computing business benefited from the rapid increase in Tier1 usage load in this quarter, including the continued increase in usage by customers such as SAP and Lufthansa. We believe that super customers will not reduce digital cloud computing spending in an inflationary economy, but will continue to switch to the cloud to reduce costs and increase efficiency. Microsoft Corp benefits from a comprehensive product line and perfect industry service capabilities, and is expected to continue to benefit from the cloud conversion process of major customers.

2) mergers and acquisitions continue to strengthen enterprise services and industry cloud strength. The company completed the merger and acquisition of Nuance this quarter and announced the acquisition of process mining company Minit. The acquisition of Nuance strengthens the company's accumulation in the medical cloud and voice recognition, while Minit is expected to enhance the strength of the company's CRMERP suite Dynamics.

3) the usage of basic software layer and software development and deployment tools continues to increase rapidly. The use of corporate data governance and database-related tools continued to increase significantly in the quarter.

4) the increase in demand for personal PC will continue into the next quarter, which will boost the continued performance of Office and Windows business: we believe that the demand for personal PC will benefit from the return to the office after the epidemic, and individual users' use of offices, games, etc., will increase, and the driving force is expected to continue into the next quarter.

• Amazon.Com Inc Quarterly report comments: the pace of capital expenditure and the speed of e-commerce expansion may slow down

The deviation between the area of Amazon.Com Inc's warehousing and distribution center and income was once one of the core logic of betting on higher-than-expected income, but the management announced this quarter that the utilization rate of input area needs to be improved.Which meansThe market believes that the "long slope thick snow", the long-term growth rate of e-commerce may be given a discount.

Both revenue and net profit fell short of Bloomberg's consensus expectations. On April 29th, 2022, Amazon.Com Inc released the first quarterly report of fiscal year 2022:

Amazon.Com Inc achieved a net sales income of US $116.444 billion, an increase of 7.3 per cent over the same period last year. Excluding the adverse impact of year-on-year changes in exchange rates throughout the quarter, it increased by 9% year-on-year. Operating revenue was 3.7 billion US dollars, down 58.4% from the same period last year.

The net loss was minus $3.844 billion, down 147% from a year earlier, of which $7.6 billion was a loss on the valuation of marketable equity securities caused by Rivian's equity investments.

Three major business segments: AWS, North America and International. Only the AWS business segment made a profit in the first quarter of 2022.

The AWS business sector has become the main revenue force, and the company has reached new cooperation with customers in telecom, aerospace, sports and other major industries. The AWS business segment recorded a record $18.441 billion in revenue in the first quarter of 2022, up 44 per cent from a year earlier.

Revenue growth has prompted the company to accelerate its investment in AWS, including the global deployment of infrastructure and the launch of a next-generation database. The North American business segment accounted for the largest share of total sales, but profits fell well below market expectations, down 145 per cent from a year earlier. Operating expenses in this sector grew 16.2 per cent year-on-year, far exceeding net sales growth (7.5 per cent).

Amazon.Com Inc has further expanded the rights of prime membership, innovated environmentally friendly products, and used 3D technology to enhance customers' shopping experience. Designed to enhance customer stickiness. For enterprises to launch the industry's first procurement tool (punch-in), through the creation and coordination of purchase orders to simplify the purchase process.

Considering the growth rate of consumer business in the past two years, Amazon.Com Inc plans to double the size of the network in the next two years. Amazon.Com Inc completed the acquisition of MGM this quarter to provide customers with more digital media content choices. The impact of this acquisition on consolidated operating income is not significant. Profits in the international business segment fell well below market expectations, down 202 per cent from a year earlier. Net sales in this sector fell 6.6% from a year earlier.

• Alphabet Inc-CL C Quarterly report comments: travel search demand smooth macro fluctuations, but Youtube growth is slightly worrying

The company's net income was basically in line with expectations: the company's FY22Q1 consolidated revenue was $68 billion. Four major business segments: Alphabet Inc-CL C Services, Google Cloud, OtherBets, other income. Among them, Alphabet Inc-CL C service plate contribution profit still accounts for the giant.

The total income of Alphabet Inc-CL C's service department was 61.5 billion US dollars, an increase of 20%, and the demand for tourism and retail advertising picked up.Alphabet Inc-CL C's search and other advertising revenue rose 24% in the quarter. YouTube's advertising revenue rose 14% to $6.9 billion.

The deceleration in year-on-year growth is mainly due to the high base in 1Q2021. Online advertising revenue rose 20 per cent to $8.2 billion, driven by AdSense and AdMob. Other income increased by 5 per cent to $6.8 billion.

This growth rate reflected a significant increase in YouTube's non-advertising revenue, driven by growth in YouTubeMusic and Premium and YouTubeTV subscribers, which was largely offset by a year-on-year decline in Play revenue, mainly due to pricing adjustments. At the same time, second-quarter results will continue to reflect the continuing impact of the suspension of Russian operations.

Alphabet Inc-CL C Cloud Plate's operating income was US $5.8 billion, an increase of 44%. It continues to grow at a high speed, and it still takes time for profits to become positive.GCP's revenue growth has once again outpaced cloud computing reflecting significant growth in infrastructure and platform services. Driven by the digital transformation, Alphabet Inc-CL C Cloud is in strong demand, and more and more customers are choosing Google Cloud to help take advantage of Google's global infrastructure products.

OtherBets's revenue is $440 million.

• Tesla, Inc. quarterly report comments: delivery capacity and profitability are slightly higher than market expectations

Both delivery capacity and profitability slightly exceed market expectations:The total revenue in the first quarter of 2022 was 18.8 billion US dollars, an increase of 81 percent over the same period last year, and the operating profit margin reached 19.7 percent. Among all batch OEM, the operating profit margin set a new record for a single quarter, of which automobile revenue reached 16.9 billion US dollars, an increase of 87 percent over the same period last year.

In terms of automobile production and sales, the total automobile output in the first quarter was 305407, an increase of 69% over the same period last year, and the car delivery volume was 310048, an increase of 68% over the same period last year.Set a record for vehicle delivery in a single quarter. The gross profit margin of automobile revenue increased by 6.4 percentage points year-on-year to 32.9%.

Market layout:

(1) in Texas, USA, Tesla began delivering ModelY at its new plant in Austin, Texas, in April, delivering the first vehicles equipped with 4680 one-piece front body castings and structural battery packs at the CyberRodeo opening ceremony.

(2) in Shanghai, China, weekly productivity was high in the first quarter, but the surge in COVID-19 cases led to temporary plant closures and parts of the supply chain, production has recently begun to recover at a limited level, and Tesla is working to resume full production as soon as possible, but this will affect total construction and delivery in the second quarter.

(3) in Berlin-Brandenburg, Europe, production of Gigafactory began in March 2022 using unstructured battery packs with 2170 batteries, and it is expected that this year GigafactoryTexas will be able to produce ModelY using both structural components of 4680 batteries and unstructured components with 2170 batteries.

Technological progress: self-driving and fully automatic driving (FSD) technology, vehicle software will continue to improve.

On the battery, powertrain and manufacturing side, given the importance of battery chemical diversity for long-term capacity growth, nearly half of Tesla's first-quarter cars are equipped with nickel-or cobalt-free lithium iron phosphate (LFP) batteries. In terms of energy technology, energy storage deployment grew 90 per cent year-on-year to 846MW hours in the first quarter, driven by strong Powerwall deployment. At the same time, Tesla is developing a dedicated self-driving taxi that is highly optimized for autonomy without the need for a steering wheel and pedals in an attempt to achieve the lowest cost per kilometer.

• Comments on Meta Quarterly report

Overall profit: first-quarter revenue of $27.9 billion. Of this total, app family (FamilyofApps) earned $27.2 billion, advertising revenue was $27 billion, and meta-universe VR business (RealityLabs) received $700m, up 30 per cent from a year earlier. Facebook Inc's average DAU in the first quarter was 1.96 billion, an increase of 4% over the same period last year, returning to the growth trend after the first month-on-month decline in the fourth quarter of last year.

Meta's revenue guidance for the second quarter is US $280-30 billion, mainly affected by global inflation, exchange rate movements, Russia-Ukraine conflict, TikTok competition and so on. In addition, Apple Inc's new privacy policy last year and tighter regulation of the Internet industry in the IOS16 system, the European Union and around the world have all become potential risks. Revenue headwinds could lead to a slowdown in corporate investment, including artificial intelligence and machine learning infrastructure.

The core of Meta's meta-universe strategy is the social platform Horizon, but it is still in its early stages. A web-based version of Horizon is expected to be launched by the end of this year.On the hardware side, a high-end VR device codenamed Cambria will be released at the end of this year, with the goal of eventually replacing computers as office equipment.

It also has facial and eye tracking capabilities to upload facial expressions to Horizon in real time. Although the long-term investment cycle of meta-universe is long, the company still has the opportunity to make a profit in the short term, such as partnering with advertisers to open stores in the virtual world and promoting them through advertisements such as Feeds and Reels.

The company's long-term outlook for meta-universe business is to use the profits of traditional business for meta-universe business development. At the same time, the company will also measure the pace of capital expenditure in new business and invest in a planned way.