What made major tech-stocks to rally even during this pandemic?

What made major tech-stocks to rally even during this pandemic?

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Tech-giants Amazon, Apple, Facebook and Google released their earnings on 30th July. The result shows that the tech-sector has highly benefited from the coronavirus pandemic which sky-rocketed their share prices.

Amazon

On a day when the US announced economic growth, which showed an overall collapse by a record 32.9%, Amazon reported a profit of $5.2bn for the quarter and sales of $88.9bn. This is almost 40% higher than in 2019. Amazon Web Services and cloud computing division recorded revenue of $10.8bn for the quarter boosted its growth as most of its consumers turned online during the pandemic.

Facebook

Facebook recovered from an advertising boycott campaign over hate speech in July to have surpassed the estimated quarterly revenue. Ad sales that comprise of nearly 95% of the total revenue of Facebook witnessed a rise of 10% to $18.3bn in the second quarter. Buoyant by this positive result, Facebook shares go up by 8%.  Revenue growth was found to be the slowest since Facebook became a public company that reported 11% beating industry watcher’s expectations.

Mark Zuckerberg, the Facebook CEO started discussions over the phone with investors that are almost 9 million advertisers, because around 1,000 advertisers had participated in the July boycott. Zuckerberg vehemently criticized the government’s response to the global pandemic and rejected the speculations of Facebook employees are returning to the offices shortly. He was of the view that the US govt. could have managed the pandemic more effectively.  Zuckerberg tried to reiterate its commitment to be a supporter of small businesses and emphasized its role in strengthening the online marketplace. He was extremely irritated by the fact that the govt is trying to rein internet advertising. This policy would reduce the opportunities for small businesses at the macroeconomic level.

Apple

Apple registered revenue of $59.7bn for its fiscal third-quarter that is above Wall Street’s expectations. In June, Apple showed a record double-digit growth in both products and services and growth in each of the geographic segments.  Apple CEO was more or less satisfied with this performance even during these troubled times and felt highly of Apple’s products to have played an important role in customers’ lives.

Google

Google parent Alphabet’s revenues fell by 2% to $38bn. This is for the first time the company showed a decline, but it’s still better than what the analysts had expected.

These reports are coming at a time when the tech-giants are increasingly accused of playing the dominant role to quash rivals and overcharge the people and businesses reliant on their services. Though Facebook might still appear to be a winner in terms of its user-base, the world is changing and getting more conscious of tricks played by the tech-giants. It may be just a warning but shortly if Facebook doesn’t satisfy the advertisers and governments that it is acting responsibly and ethically; it can harm its growth.

What could be the reasons for growth in stocks of tech-giants?

  1. Shares of Apple, Netflix, Microsoft, and Amazon are all trading on record highs.
  2. All four of these stocks have gone up 29% for 2020 and have contributed immensely to the Nasdaq Composite’s massive outperformance.
  3. Investors braced up for these shares because they believe their business models can not only get rid of this downturn, but can also thrive in it.
  4. This has resulted major tech and software stocks to behave like a Treasury.

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