Many companies may be warning of a sales slump, but Amazon and Apple seem to be still offering products that people are willing to spend on.
Although investors were bracing for the worst, both companies posted better than expected revenue for their most recent quarters.
"Despite recession concerns, there is still a strong foundation for consumer spending with low unemployment and higher wages," Andrew Lipsman, Insider Intelligence principal analyst, said. "The most important factor in consumer spending is whether or not consumers have money in their bank accounts, and at the current moment they do."
Amazon reported revenue of $121.2 billion, ahead of the $119.1 billion Refinitiv analyst estimate. Earnings per share came in at a loss of 20 cents. The company had cautioned that sales may shrink but had braced itself by improving its fulfillment center logistics including owning more parts of its supply chain and not hiring additional workers.
The company also said its third-quarter revenue will come in between $125 billion and $130 billion, on the higher end of the $126.4 billion estimate. It touted new features like free delivery from Grubhub for a year, exclusive access to NFL Thursday Night Football games starting September 15, and the release of "The Lord of the Rings: The Rings of Power" on September 2 as additional draws in the upcoming quarter.
"So far it looks like the American consumer overall continues to be relatively strong. In certain categories like apparel, travel accessories, there is actually a lot of demand," Alasdair McLean-Foreman, ad platform Teikametrics CEO, said. "It's very category-specific and in general Amazon reflects a value shopper as its focus has always been lowest prices, selection, and convenience."
Insider Intelligence's Lipsman also noted that while Prime Day, which accounted for sales of more than 300 million items, provided a "jolt" to revenue this past quarter, Amazon continuing to find ways to become more efficient as a company may lead to more revenue. The cost of gas going down may also give consumers more spending money.
"While inflation is weighing on consumer sentiment and making it so dollars don't stretch as far, it's not like the bottom has fallen out," he said.
Apple also exceeded expectations, reaching $83 billion in revenue, slightly ahead of the $82.8 billion Refinitiv estimate. Earnings came in at $1.20 versus the $1.16 estimate.
The company's main product, the iPhone, beat analyst expectations and took in $40.67 billion in revenue versus the $38.33 billion projection. It marked a small, but notable 3 percent increase year-over-year, considering some analysts were projecting iPhone sales would decline for the first time in almost two years.
"Most of Apple's revenue comes from its smartphone, a device that consumers upgrade more often than a PC," Julie Ask, Forrester Research vice president, said via email.
Ask also noted that Apple had a lot of success with its services division which offers cheaper products. It continued its double-digit revenue growth rate, increasing 12 percent year-over-year. Apple Pay increased in popularity as contactless payments become more standard, with Forrester research pointing to 21 percent of U.S. adults using it today. And, Americans are getting used to owning subscription services, with 76 percent of online adults using at least one music or video streaming service — both of which Apple offers.
Even though it did not provide any future revenue projections, Apple remained optimistic about the next quarter. In an interview with CNBC, Apple CEO Tim Cook said it was considering inflationary costs, especially for wages and product parts. However, it would not freeze hiring, but would do it more on a "deliberate basis."
"In terms of an outlook in the aggregate, we expect revenue to accelerate in the September quarter despite seeing some pockets of softness," Apple CEO Tim Cook said.