Apple, Amazon, Facebook and Alphabet all reported blowout quarterly results this evening, with all beating analyst revenue expectations by billions of dollars. The market completely underestimated the growing market power these companies command.
This momentum – at a time when GDP declined by 32.9% – suggests the recent massive stock market out-performance of these companies vs most other companies might be justified. The economy has rapidly shifted from “face-to-face” to “virtual” and a relatively small proportion of companies are benefiting at the expense of the rest.
Much of this shift is permanent. I mean, virus or no virus, is anyone really excited about going to a fucking mall again? Or take the crowded bus? Even meetings are more tolerable now.
Nah, I’ll spend my commute time on doing something pointless on my phone, possibly even spending money. And when I’m working I’ll use MS Teams instead of airplanes to meet people. People and businesses have discovered cost savings they should have known existed.
And the companies that don’t benefit? Commercial real estate. Travel. Restaurants. All the places that sell the things we realized we didn’t need while under quarantine. Many are small businesses. Maybe eventually these businesses will recover, but until then it’s big tech’s time to gather all the nuts.
Is it any wonder why Amazon, Apple, Facebook and Alphabet have done so well? We’re witnessing a great wealth transfer to big tech.