Much of the world had its focus drawn to leading US tech companies recently as earnings reports were being released and the results varied from positive all the way through to record-breaking disaster. With those figures in the bag, we are now going to turn our attention to a very unique situation that see’s three tech giants in a race to beat each other and reach the mythical milestone of a $1 trillion market cap.
Amazon ($876.41bn), Apple ($956.48bn) and Google ($884.82bn) are all vying for top spot in the race and with Apple reporting their positive financials on Tuesday, we could have a winner before the end of the week. While there is no actual prize for becoming the first company to reach a market cap of $1 trillion, yet the very nature of fandom surrounding these companies is the reason there is much prestige at stake and why this story is getting so much attention. However it’s this same trend in popularity that makes this such a volatile race.
One method used in order to gain a valuation of a company is to take into account its potential future revenue. According to the current trends and popularity Amazon is seeing off all competitors as the worlds ‘Everything Store’; while there are more Android handsets in the world than iOS, Apple have been amongst the top 5 smartphone vendors since 2009; and Google has crushed competition by growing its total share of the digital advertising to 31%. All of these factors help boost the valuation of each company, but what happens if a new site, app or platform comes along to bucks the trend?
This year alone has seen scandals, missed estimates and negative news hit many of the top tech companies, yet it has affected each of them in different ways. Facebook missed estimates and had a downbeat outlook for the remainder of the year leading to a $120bn drop in market cap in a single day, the biggest loss for any company in history. Yet on the other hand, just days after being hit with the largest ever fine from the EU following an antitrust investigation, Google saw a 5% gain when they reported. With these stories and many more making headlines on a regular basis, there will likely be many more twists and turns along the way.
As with any stock, investors pay very close attention to market news as well as competition and earning reports when making their decisions and that’s why we are adding ‘The Race to $1 Trillion’ section to our ‘Week Ahead’ email to keep you up to date. To sign up and get market news, research and analysis delivered straight to your inbox, simply click here.
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