The five largest U.S. technology companies by market capitalization (Apple, Microsoft, Google, Amazon, and FB) have a total market capitalization of a staggering $ 5.2 trillion. This accounts for more than 17% of the total market capitalization of companies listed on the S & P 500 Index.
According to CNBC, although regulators are putting greater pressure on large technology companies and many legislators are trying to split them, these companies are actually larger than ever before.
On Thursday, U.S. local time, Google ’s parent company Alphabet ’s market value broke the $ 1 trillion mark, becoming the fourth U.S. technology company to cross this threshold after Apple, Microsoft and Amazon. Unlike Apple and Microsoft, however, Amazon’s market value has fallen back to about $ 930 billion.
According to data released by market research firm FactSet, adding Facebook to the list, the five technology companies with the highest market capitalization in the United States currently have a total market capitalization of a staggering US $ 5.2 trillion, accounting for more than 17% of the total market value of companies listed on the S & P 500 index. This is an increase from 11% five years ago, of which about two-thirds of the market value (that is, 3.5 trillion US dollars) accumulated during this period.
Whether at home or in the office, these companies’ products and services are embracing us like never before, attracting our attention and generating revenue from businesses, consumers and advertisers. Driven by all these trends, investors are mostly being investigated by the U.S. Department of Justice, the Federal Trade Commission (FTC), and state law enforcement agencies. This is due to potential anti-competitive behavior by large technology companies. Presidential candidate Elizabeth Warren and Bernie Sanders dismissed calls to split the companies.
Specific to Alphabet, the US multi-state attorney general is investigating its dominant search business and the Android operating system, which has many Google applications pre-installed. Although the European Union has issued billions of dollars in fines in the past, Google continues to thrive, and privacy-related regulations, such as the European General Data Protection Regulations, are generally beneficial to Google, And hurt smaller businesses because they use and collect data less often.
“The tech giants have the resources and the means to meet these needs, but not every competitor can do it,” said Kevin Walkush, portfolio manager at Jensen Quality Growth Fund. The Growth Fund manages about $ 8.5 billion in assets, with Alphabet, Microsoft and Apple holding the most stocks. For Google, he said, “this is a significant risk, but we think they have enough resources to deal with any regulatory obstacles they face. They are likely to do better.”
Google must also overcome severe internal turmoil. The company faces an investigation into how executives handle allegations of sexual harassment and other misconduct, as well as employee protests related to mistrust of leadership and the manner in which certain employees are fired.
None of this has prevented Alphabet’s market value from climbing to $ 1 trillion. The stock rose more than 0.8% on Thursday to close at $ 1451.7 per share, a cumulative increase of 33% over the past year. Apple, which has the highest market value in the United States, has always been the best-performing company among large technology companies. Its stock price has jumped 103% over the same period, and Microsoft and Facebook have increased more than 50%.
Advertising still accounts for almost all of Alphabet’s revenue. However, the company has invested heavily in cloud computing infrastructure, with annual revenues exceeding $ 8 billion. This is second only to Amazon and Microsoft. Under the leadership of former Oracle executive Thomas Kurian, Google’s cloud computing platform has been expanding through recruitment and acquisitions, including the $ 2.6 billion acquisition of data analysis company Looker last year.
Google’s recent multi-billion dollar deal is not online advertising or cloud computing. Last November, it announced the purchase of Fitbit, a smartwatch maker, for $ 2.1 billion. In recent years, Fitbit’s stock price has fallen sharply in competition mainly from Apple Watch. According to reports, the US Department of Justice will review the transaction.
Another consumer electronics company struggling for similar reasons is Sonos, a home speaker maker, which is being hit by a surge in low-cost devices from Amazon and Google. Sonos sued Google last week for patent infringement. The indictment states that as early as 2013 when the two companies cooperated, Google copied Sonos’ wireless speaker system technology. Google refutes these claims.
Sonos told more details in the indictment, which will surely resonate with thousands of smaller tech companies. In this technology industry, Google, Amazon, and Apple can sell products at a loss, stifle competitors, and suck a lot of data into their tracks.
In the words of Sonos: “Google ’s business strategy is to use its multi-room audio products to extract valuable consumer data from users, thereby further consolidating Google ’s platform among users and ultimately driving its dominant advertising and search platform Development, which further exacerbated the damage caused by Google ’s infringement. In order to advance this strategy, Google not only copied the patented technology of Sonos, but also subsidized the price of its patent infringing products (including entry-level products) and tried to occupy The entire market. These actions have caused significant damage to Sonos. ”
Although Alphabet is expanding its enterprise software business and building a series of gadgets, the advertising department continues to thrive and inject a lot of cash. Google advertising revenue climbed 17% in the third quarter to $ 33.9 billion, and Google is preparing for a large number of events in 2020. RBC Capital Markets analyst Mark Mahaney said the upcoming presidential election, the Tokyo Summer Olympics and the 2020 European Cup (European Football Championship) will help drive online advertising leaders Google and Facebook performance.
Mahani’s ratings for both stocks are “Buy”, saying: “This year is an important year for the global advertising industry, and many events are large advertising campaigns. The two companies I follow (Facebook and Google) obviously Are companies that use this for derivatives trading. Fundamentally, we think they are well prepared for this year and this quarter. “