Opinion: Big Tech’s Trillion Dollar Pandemic Year May Be Just the Beginning

Combining just the revenues of four companies that are in the regulatory spotlight for their dominance of the tech sector and the US economy: Alphabet Inc. GOOG GOOGL (before traffic acquisition costs), Amazon Inc. AMZN, Apple Inc. AAPL and Facebook Inc. FB – Brings us to $ 1 trillion in the full twelve months of pandemic life in the US, from late March 2020 to the same date in 2021.

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Add Microsoft Corp. MSFT, -0.13%, which obviously should be done, as it is poised to be the second American company to claim a $ 2 trillion market capitalization, after Apple, and the total grows to about $ 1.2 trillions. That equates to a top 20 gross domestic product for some countries, roughly the size of the Mexican or Indonesian economies before the pandemic, which had a negative effect on production in these countries, while apparently only boosting that of the large ones. technologies. Of that $ 1.2 trillion in revenue, the five tech companies made nearly a quarter of a trillion dollars in profits, roughly $ 244 billion. And that’s GAAP net income, not operating earnings, not adjusted earnings, and not the Ebitda figures that many companies use to make their earnings appear more robust. No need to change stats when you are Big Tech.

For all five, the first full 12 months of the COVID-19 pandemic would have been the most successful years of all time, if it were actually a fiscal or calendar year. And remember, we are not talking about young companies that have not been public for a long time. Apple and Microsoft, which went public in 1976 and 1986 respectively, have been titans since well into the previous millennium and have produced huge annual and total sales profits in the past, while Google and Amazon were products of the dot-com boom. which ended more than two decades ago. It’s even more astonishing to realize that all of these companies, with the exception of the software giant Microsoft, are under some form of federal investigation for anti-competitive practices and behavior, but perhaps that is precisely the point of the investigations. Even amid rounds and rounds of time-consuming congressional hearings and millions of dollars spent on the first round of legal fees, these companies continue to run, racking up money hand-in-hand. In Microsoft’s case, it’s been there, done that, for now at least. In all respects, the growing financial strength and powerful effects on the economy of big technologies cannot be ignored. Amazon grew its workforce by more than 50% in the last 12 months, and is now the second largest American employer behind Walmart Inc. WMT, + 0.20%, the only other American company besides Apple and Amazon that is making sales. $ 100 million regular. quarters. In 2020, Amazon hired more than 500,000 employees as it began to prepare for more deliveries and more services in an increasingly digital world with everyone locked in in the early months of the pandemic. The number of employees Amazon hired in the past 12 months dwarfs the entire combined workforce of Google, Facebook and Microsoft. To learn more: The COVID-19 boom in technology won’t last forever, but it won’t end yet. Investors have been largely rewarded for the performance of companies. All five have seen their shares hit record highs in 2021 and, as of Friday, their combined market capitalization was approaching $ 8.5 trillion. Although together they are only 1% of the companies in the S&P 500 SPX, -0.72%, their market capitalization represents almost a quarter of the total of the entire index, 23.7%. The biggest question for investors is whether this is a spike or a new baseline. The analyst seems to consider it the latter. While acknowledging that it will be difficult to grow at the same pace relative to current performance, analysts largely expect this kind of financial gain to be the new normal for big tech. “It’s a tough question about peak earnings,” said Brendan Connaughton, founder and managing partner of Catalyst Private Wealth. “From here on, the next three quarters will be difficult comparisons… The absolute numbers will continue to be impressive, but the growth rates will be less impressive. They’re going to be hanging around in senior management saying, ‘I hope investors look at gross numbers, not relative to last year.’ For more information: See our series Business in the Age of COVID-19 Will it be enough? to keep pushing stocks higher? Apple, after revealing a staggering quarter in which the company beat Wall Street revenue expectations by $ 12.5 billion, saw the stock end unchanged the day after its report. “It doesn’t get better than this,” Bernstein Research analyst Toni Sacconaghi said in his note on Apple’s results, and investors seemed to agree. “When and to what extent the pandemic spending force will fade is clearly the key question,” wrote Sacconaghi, a question that could be asked of all Big Tech companies. fiscal year [fiscal year] 22, and they currently model revenue fractionally in fiscal 22 … but it could be worse. ”However, analysts were also not expecting much of the growth shown in the last week of first-quarter earnings, as the five companies they largely destroyed their internal and analyst forecasts for earnings and revenue. And even if big tech can’t grow at the same rate as current performance, they can’t, right? Who knows by now, just put numbers like this in. ranks the huge valuations they’re getting from Wall Street right now. The huge profits confirm how these companies are crushing their competition and dominating the US economy. It’s a big sauce train for Big Tech investors, but it sets a big goal on the back for regulators.