AYA free finbuzz analytic report on the U.S. top tech titans FAMGA Spring-Summer 2020U.S. tech titans Facebook, Apple, Microsoft, Google, and Amazon (FAMGA) enjoy a stock market bull run in recent times even as global regulators probe into antitrust issues and activists fret about consumer privacy problems. The sharp rise of stock market capitalization for these American tech titans is about $2 trillion or equivalent to the German stock market valuation. At least 4 out of these 5 primary tech giants, Alphabet, Amazon, Apple, and Microsoft are each worth more than $1 trillion, and Facebook is worth $620 billion. Despite the current techlash in Silicon Valley, New York, and Seattle etc, most fund managers worldwide have chosen to move onto the next stage of high-tech stock investment valuation. This calculus suggests that these U.S. tech titans continue to operate as core platform enterprises with positive network effects, scale economies, and information cascades. Competitive moats and first-mover advantages empower these open platform enterprises to earn new riches amid economic policy uncertainty around the current corona virus pandemic outbreak in 2020.
The recent surge in high-tech stock market valuation raises at least 2 major worries. First, institutional investors and retail traders may or may not prevent a speculative asset bubble in the big tech sector. The 5 major tech giants account for $4.6 trillion stock market capitalization or 20% of the S&P 500 stock market index. In fact, the millennium dotcom bubble serves as a precedent in American stock market history and eventually triggers a financial market downturn at the start of the new century. Second, the opposite investor concern is that the current tech stock valuation may turn out to be right. The recent $2 trillion big tech bull run suggests that high-tech profits are likely to double or so in the next decade. This bullish investor sentiment may extrapolate in to the foreseeable future. The inadvertent ramifications can be economic tremors in rich countries with an unfair distribution and concentration of both socio-economic market power and political clout.
In recent years, the 5 U.S. top tech titans crank out almost $200 billion annual cash flows after capital investments. In stark contrast, the loss-laden antics of flaky tech unicorns such as Lyft, Netflix, Uber, WeWork, and Zoom etc may evoke some sort of speculative froth toward the tail end of a long-term tech boom. Global regulators can punish many tech firms for tax evasion, privacy intrusion, and anti-competitive misconduct. However, their regulatory fines and penalties amount to less than 1% of the stock market valuation of Facebook, Apple, Microsoft, Google, and Amazon (FAMGA). After all, such punitive fines and penalties seem to be tolerable costs of operating open platform enterprises in social media, mobile connectivity, software, Internet search, e-commerce, cloud service provision, and so forth. In most OECD countries, only 10% of retail sales are online via Alibaba, Amazon, and eBay, and perhaps 20% of computer workloads land in the cloud with Amazon, Microsoft, and Google etc. FAMGA can often operate beyond national boundaries, and this global reach allows big tech to expand at an exponential pace. Digital technology diffusion remains relatively low in non-OECD countries in key comparison to ubiquitous and pervasive big tech adoption in most OECD countries. In this positive light, FAMGA can continue to boost their global user growth and monetization in the next decade.
Nowadays, FAMGA employ more than 1 million people and spend $200 billion per year in Corporate America. The less rosy picture outside the U.S. seems to be a tumult of regulatory experiments. China now keeps its Internet titans such as Baidu, Alibaba, and Tencent under tacit state control and then wants to rely less on Silicon Valley (i.e. FAMGA and several other tech unicorns). At least 27 countries such as Australia, Brazil, France, Germany, and Indonesia consider imposing digital taxes on FAMGA for jurisdictional reasons. Also, India forcefully regulates e-commerce and online speech. Moreover, the European Union wants individual users to own-and-control their personal data. E.U. General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) are good examples of current checks and balances for global regulators to safeguard against FAMGA market power and dominance. In essence, the law of inadvertent consequences counsels caution.
AYA fintech network platform: https://ayafintech.network/blog/aya-free-finbuzz-analytic-report-on-the-us-top-tech-titans-famga-spring-summer-2020
