The big four tech group

The big four tech companies are somewhat always in the market’s focus with market participants carefully following the progress or concerns surrounding the companies on a daily basis. The companies are of tremendous importance to the world not only for the services they offer, but also because they employ a considerable work force which supports the economy as a whole. From a traders perspective this is awesome as the fact that these stocks are constantly monitored seems to enable for setups to place orders, thus increasing the possibilities for a significant gain. Yet despite that, the big US tech companies are very important because with their volatility they have the strength to move or dominate the price action of some of the largest US indexes, playing a crucial role on the overall activity of the stock markets. These companies, namely Google, Facebook, Amazon, and Apple are some of the stocks that will be detailed in this report.

Google: Sky is the limit if privacy protection fears are overcome

Alphabet Inc. is the mother company of Google (#GOOG) and the firm’s Google segment is divided into Google Services and Google Cloud. According to the most recent Alphabet first quarter 2021 results, revenues saw an increase of 34% on a yearly basis. The increase in revenue is more than double compared to the increase observed in the previous year’s same quarter. Alphabet’s profits seemingly increased as the pandemic kept people at home, watching YouTube videos and clicking on web advertisements served up by the company. Another fact that is usually considered a positive sign for a company’s economic health was the announcement of a $50bn share buyback program. Upon announcement the news pushed shares higher in after-hours trading. Some analysts suggest Alphabet’s cloud business as well as Waymo LLC, the firm’s subsidiary related to autonomous driving technology development could be the strongest segments of its overall business and could even support long-term growth for Google. One of the major concerns over Alphabet’s activities and specifically Google’s search engine is privacy and safety of users which spills in many other directions including third-party data collection. In the past days, CNBC announced the US Department of Justice is beginning to prepare an antitrust investigation against the company. Despite the company being constantly bombarded with negative headlines over the pre mentioned matter, on a Year to date basis the company’s shares are up +36.57%.

Facebook: Still growing despite adversity

Facebook (#FB) is a social media giant that currently runs platforms with over 2.3 billion daily users. Facebook also owns other social media platforms like Instagram and communication apps like WhatsApp. According to its financial results for the quarter ended March 31, 2021 the company saw a drastic boost of total revenues of 48% compared to the same quarter last year. Furthermore its net income figure was up by 94% on a yearly basis once again displaying impressive results and confirming the company is in a good shape financially. Facebook very similar to Google benefited greatly from advertising during the pandemic which according to its earnings results, added 46% on a yearly basis. From a more critical perspective the company has also crossed swords with many governments that have challenged the social media firm’s practices on various fronts. Most recently the Financial Times said the UK and EU formally announced competition investigations into Facebook’s dating and classifieds businesses. In the past Facebook had also clashed with the Australian government which passed a law aimed at forcing Google and Facebook to pay taxes for news content on their platforms. The situation turned into a disaster with Facebook blocking all news content to Australians, forcing the government to come back and renegotiate the laws yet leaving a resentment on both sides over the issue. Despite the fact that Facebook has come under immense pressure from authorities in the past years, the company displays constant growth in terms of valuation, stock price and users proving it is rightly among the most influential and powerful companies of the world.

Amazon: results from expanding on different fronts remain to be seen

Amazon (#AMZN) the biggest online retailer worldwide has websites dedicated to different parts of the world supporting many businesses on the resale front. According to its financial results for its first quarter ended March 31, 2021, net sales increased 44% in the first quarter, compared to the first quarter 2020. Despite online selling Amazon’s business like cloud computing and advertising inspire confidence and have driven results accordingly. The company has shown its ability to allocate resources on various unrelated fronts and be very competitive doing it at the same time. For example Amazon’s Prime video streaming operates within a very competitive industry in which abundant consumer choice exists and companies face high production costs and the need to be competitive on subscriptions. Amazon is competing with Netflix (#NFLX) and Disney (#DIS) for a share of the market but has not been able to head the list so far. Thus we could say Amazon’s action to increase its chances announcing it bought film studio MGM in the past weeks was rightfully chosen. The move however needs to be justified in terms of users so it remains to be seen whether it will support Amazon Prime. Amazon also purchased supermarket chain Whole Foods stepping into unknown territory, thus possibly upsetting big competitors like Walmart (#WMT). In the near past, Jeff Bezos the company’s founder and CEO announced he will formally step down as Amazon CEO on July 5. He’s successor will be Andy Jassy, Amazon’s cloud-computing boss.

Apple – Can competition keep up?

Apple (#AAPL) is the oldest company among the big four group but this only indicates it managed to remain relevant,to the trends and preferences of theirs users especially in the past 20 years. Based on its most recent earnings report for the period ending March 27 2021, Apple posted a quarterly record revenue increase of 54 percent year over year. The success that Apple has managed to obtain through its iPhone is remarkable and also the fact that it managed to pass the quality to most of its other products is a sort of revolution. Apple has a great market of followers all over the world with international sales contributing for 67 percent of the quarter’s revenue but most importantly in China. China is not only a large customer market for Apple but also currently the biggest supplier than any other country, taking full advantage of the Mainland. Its dependence on China is a sort of concern for the US government which is trying to reduce exposure to the Mainland. In the past weeks, Apple has been in the media’s eye once again as Epic Games the maker of Fortnite, commenced its case against Apple, accusing the big tech company of operating an illegal monopoly. This is not the first time Apple has come against such accusation and in our opinion it may continue to face such adversities as long as it continues to create quality products.

General Comment

As a closure and perhaps speaking on behalf of all of the pre mentioned companies, we could say that they have expanded and reached a level of almost impossible influence which could have also turned them against each other. These companies are not only competing with their industry which is currently ever growing but most importantly they are fighting to keep and increase their market share on as many fronts as possible turning on each other. This could add more drama to the big tech sector. Also as governments, market participants and competition regulators are viewing the dominance of these companies, they have shown signs of frustration and agony over the growing power that they currently preserve. Some argue that attempts to break down the big tech sector into more controllable pieces is inevitable. In our humble opinion these companies have rightfully gained the number one spot in growth and sales in the past decades as they have evidently worked towards improving their products and offering the world with cutting edge technology. The same goes for Microsoft (#MSFT) which is also among the best and could be given a future look into as it deserves a similar analysis.

US Big Tech share price performance in the past 6 months (Daily chart)

이 기사와 관련된 일반적인 질문이나 의견이 있으시면 저희 연구팀으로 직접 이메일을 보내주십시오 research_team@ironfx.com

책임 고지:

본 자료는 투자 권유가 아니며 정보 전달의 목적이므로 참조만 하시기 바랍니다. IronFX는 본 자료 내에서 제 3자가 이용하거나 링크를 연결한 데이터 또는 정보에 대해 책임이 없습니다.

공유: