Amazon at the end of trading on Monday became the largest company by market capitalisation, surpassing Microsoft. Apple, which was the most valuable company more than one year, now occupies the 4th place: its shares have collapsed over the past three months by 36%, including 10% on 3 January, when the company lowered the forecast of quarterly revenue for first time in over 15 years.
Microsoft, whose shares during a falling market at the end of last year fell not as much as Apple has, since the beginning of December established on the 1st place. But at the beginning of this year, investors began to actively buy paper Amazon, which rose 8.5% after a quarterly drop of 25% in the end, the online retailer may announce revenue growth in the fourth quarter by 20% compared to the same period in 2017, according to analysts ‘ forecasts compiled by FactSet.
Shares of the largest technology companies who were previously leaders of growth fell in the fourth quarter of 2018, stronger than the US stock market as a whole: the Nasdaq 100 index lost 17% versus almost 14% S&P 500. Nevertheless, they remain world leaders. Market value Amazon has made Monday $796,78 billion (in September she for a short time, reached $1 trillion), Microsoft — $783,57 billion Capitalization of Google, the parent company Google was $745,63 billion, and Apple, which at its peak in early October was worth $1.1 trillion, — $701,99 billion
Further, by a large margin is the company to Warren Buffett’s Berkshire Hathaway ($485 billion at the end of trading Monday), ahead of Facebook, whose shares since the end of July 2017 fell by 36.5% due to a series of scandals, especially with regard to the protection of user data. JPMorgan Chase and Johnson & Johnson, leaders in their sectors, have a capitalization of at least $350 billion, and retail giant Walmart — $271,5 billion
Leading technology company is not going anywhere, says Michael Lippert, Manager of Baron Capital Opportunity Fund. They work in large markets “and neither Amazon nor Microsoft have not yet dredged, they have many more opportunities for growth,” he told The Wall Street Journal.
Four leading technology companies that once specialized and leader in their field, now increasingly compete with each other, notes the WSJ. So, Amazon, Microsoft and Google — the largest players on the market of cloud services that Amazon actually invented about 12 years ago (and Apple, according to UBS, in the 2018 fiscal year earned through its cloud service iCloud $3 billion). According to the Gartner forecast, this sector will grow from $25.3 billion in 2017 to $65.9 billion in 2021
If the first computer devices were produced by Apple, now Microsoft has Surface and Xbox, Amazon — Kindle, and Google — Chromebook (in partnership with other producers), through which companies promote their services. Google competes with Microsoft in software, and that with him in the search. Amazon, Google and Apple have their own voice assistant, but Microsoft it is used on devices from other manufacturers. Amazon is already engaged in the production of content, and Apple deploys the business. The company actively works in the areas of artificial intelligence, driverless cars, etc.
The technology sector is no more?
However, the ubiquity of technology means that the idea of “technology stocks” as a separate group of companies thanks to the development of computer technology and the Internet becomes obsolete, said the Financial Times. Evidence of this can be considered the largest industry of the reclassification, which is in September of 2018 spent the index providers S&P and MSCI Global. So, in the S&P 500 index of 13 companies in the consumer sector, six — sector and three from the telecommunications services sector were transferred to the new sector of “Communication services.”
From the information technology sector (where, however, Apple remained) were removed, in particular, Facebook, Twitter, Alphabet, Chinese Tencent and Baidu, which were in the “Communications services” — along with Netflix and eBay (derived from the consumer sector), Verizon and AT&T (derived from telecommunications). Amazon remained in the consumer sector along with McDonald’s and Ford Motor.
The reclassification, according to some market participants, contributed to the high volatility in the fourth quarter, as the index and exchange-traded funds had to shift from one to the other portfolios of shares worth many billions of dollars. But more importantly, notes the report Vincent, Delwar, MicroStrategy INTL FCStone: solution of index providers was the “recognition that the technology sector is no longer something special”, it “completed the technological age.”
Traditional companies are conquering the territory of its Internet competitors (Walmart already sells online almost as much as Apple indicates, Delwar), and those moving in the opposite direction Netflix, for example, has announced that it will spend in 2019 on the original content of $13 billion (about 90% of revenues). In the financial-technology sector, traditional managers, such as Fidelity, now offer robot investment consultants, specializing in robotvision Nutmeg began to offer tips live professionals. While banks engaged in the digitalization of services, FINTECH startups Zopa and Monzo received the banking license lists FT. Disruptive technologies now appear to not have Facebook and Netflix, and in areas such as climatology, stem cell research, aerospace engineering and manufacturing, the newspaper said.
All this means that the shares of those companies that were considered technological, and those that were perceived as non-technological, will be re-evaluated, says Delwar. “If technology is now everywhere, then the technology sector no longer exists, he writes. — And if it no longer exists, then the premium on its shares was not justified: in terms of a relationship of capitalization to projected earnings (P/E) premium to the Nasdaq 100 to the S&P 500 index fell to 16%. If Netflix, and Walt Disney use technology to tell stories, then why was the first P/E of 88, and the other 15? If Tesla and BMW use the technology of batteries of premium cars, why the first P/E with projected profits to be 42, and the second P/E with the actual profit of only 5.6?”
Read more •••