The strong U.S. dollar will take a toll on big tech ad S&P 500 earnings is this quarter. Tech companies generate the biggest percentage of sales outside the U.S. and companies from Apple to Meta, Alphabet, Netflix, and Tesla are worth watching for dollar impact.
When athletic apparel giant Nike disclosed on June 27 that a strong U.S. dollar weighed on sales in its most recent quarter and the rising value of the greenback would keep pressuring sales in fiscal 2023, its shares sold off, and gave an early warning to a market already worried about the earnings outlook for the June quarter. That followed a warning from Microsoft that June-quarter sales would be $460 million lower for the same reason, shaving $250 million from profit.
Indeed, the dollar’s 11% gain this year against a basket of currencies – and 12% against the euro – is a looming problem as earnings season kicks into gear. Standard & Poor’s 500 companies get 29% of their sales from outside the U.S, according to Goldman Sachs. They typically sell those products or services in local currencies, then report financial results including those sales in dollars. So if Nike sells a pair of shoes for 100 euro, it was worth about $7 less at the end of its quarter than at the beginning.
The numbers aren’t massive in percentage terms – Microsoft’s miss works out to between 1% and 2% of earnings. But in a nervous market where companies’ stocks get punished for even small earnings misses, they are worth being prepared for, experts say…
Companies with high exposure to foreign sales include Qualcomm (96%), oilfield services company Schlumberger (85%), disability insurer Aflac (70%), Netflix and Meta (59%), and Alphabet at 54%… A couple of companies worth watching as this issue develops are Tesla, which gets a quarter of its sales in developing nations like China, and Apple, which gets 19% of sales in Greater China (including Hong Kong and Taiwan) and another 24% in Europe.
MacDailyNews Take: Apple will likely have to adjust prices upward internationally (as they’ve already begun), given the strong, and strengthening, currency headwinds, especially for the crucial Christmas quarter.
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A “strong” US dollar? Where did you get that? The dollar is at its lowest point in history… and in addition, it is still overvalued if we take into account the huge foreign debt.
“ The dollar is at its lowest point in history… ” is a statement of total ignorance if not baldfaced misinformation. First, to what are you comparing the dollar?
If you actually looked at real economic data, the PPP of the US dollar is stronger today than it was when Dubya was blowing trillions in the mideast and driving the USA to its 2007 crash.
If you have better data, by all means share it. But please, stop whining about the dollar when it’s stronger than practically any other currencies, and has been since WW2. You apparently have no idea how easy you’ve had it for the last 2 generations.
Actually, main culprit was the real estate housing market COLLAPSE of the Dodd-Frank socially engineered Democrat bill. Establishing equal loaning practices of mortgages to people highly UNQUALIFIED in the emerging early days of woke FAIRNESS.
But yes, Dubya’s reckless war spending was also a huge factor in the total mix.
Interesting aside, during the Gulf War Dick Cheney’s oil buddies made a ton of money relentlessly decried to. deafening levels by Leftist activists. Remember “no blood for oil” chant?
Today however, DOUBLE STANDARD HYPOCRITE Leftists remain SILENT when the same personal enrichment schemes takes place between Hunter and Joe Biden for years. THE Gold Standard reason not to trust one-sided virtue signaling extreme leftists, the Big Media and Democrat Party.
The Mideast war tentacles stretch further to the Jan. 6 commission not interested in finding out the full story. Carefully gerrymandered by Pelosi and her hand picked commission puppets for one purpose: to damage Trump so he doesn’t run for President in 2024.
Well Liz, you’re doing a magnificent job for your dad and the family fortune. Yeah, guess in your heart forgave activist Leftists long ago whom decried and called your father corporate Republican scum for years, because after all, now you’re working with them.
I understand, energy independence and lower prices under President Trump, not exactly good for business in your neck of the Wyoming woods.
Gotta keep the money coming in cause the posh resorts, ski trips, costly memberships and fine high thin air living doesn’t come cheap in a near recession economy…🤔
Hey, guys, have you been traveling lately? Have you changed dollars in Euro, Sterling or Swiss francs? In all these cases, the dollar is now below parity… so stop veiling your face!
No fake news here: only facts!
What facts? the mdn troll network posts suppositions and whatabouts, apparently of the incorrect belief that these are useful in making a point. Can we all try posting objective data instead of emotional impressions?
Today the US$ achieved parity with the Euro for the first time in 2 decades. If that isn’t relative fiscal strength, what is?
This has nothing to do with any US politicians over that time, it has everything to do with the acute regional and global economic challenges that come from broken supply chains and wartime supply cutoffs. US farmers are jumping with glee for the best market prices this harvest for their lifetimes. US manufacturing is begging for workers and would be selling more if they could. The doom and gloomers on this site should decide if they want to support US prosperity or keep hindering it with their pathetic gotcha political attacks.
You must be one of these silly trumpists = whatever is not what you wanna hear is always FAKE… Pathetic!
Talking about $ and Euro: comparing with the Euro isn’t very smart. Euro lost a fifth of it’s value over the last two years…
Logic disconnect???
You claim: “ Euro lost a fifth of it’s value over the last two years”.
RELATIVE TO WHAT ???
Yeah we know, the US dollar.
Why is this? Nothing that anyone in the EU or the USA planned. Supply constraints are hitting everyone. The EU more acutely because of their reliance on Russian natural gas. The USA has less supply restrictions to natural gas availability.
Don’t confuse global macroeconomics with regional fiscal policy with national budgets with localized trade constraints. All factors affect each other, they are not proxy indicators for each other.
And for the record, Trump badly exacerbated the trade problems, which will be a drag for many months / years to come. His supporters should be happy he lost re-election and disappeared before the full effect of his incompetence was realized. His tax giveaway to corporations that didn’t need the money was one of the biggest transfers of wealth from taxpayers to treasonous and non democratic corporations in history. That is also constraining the ability of the government to shore up the economy via domestic production incentives. US corporations are, as usual, sitting on piles of money instead of putting it into domestic product. Governments can only sell IOUs (treasury notes).
All that being said, in this unique point in history, the best place anyone in the world can invest money would be in strategic ballistic missiles to blow Putin and his enablers asses into the stone age. If only we were awake and ready to act. Thanks to stupid executive budgeting and warmongering over the last several GOP administrations, and unappealing but overdue domestic spending in the last few dem administrations, US support for Ukraine now has to come from deficit spending. Neither party since Clinton has been able to balance the budget. Trump famously claimed he would before he set new spending records on … what? Dismantling the Post Office and DOE? No, grifting. Good riddance that US voters dumpted him.
Despite massive mismanagement, for decades, the US remains more gifted with natural resources and legal infrastructure, and an independent Fed Reserve, to make the $ stronger than most other currencies. .. and stronger than ALL crypto.
So stop the doom & gloom. You have no idea how easy you have it.