The Wall Street “Gang of 5” – Not only did they emerge unscathed from the disaster, but they excelled at the time when oil companies were losing hundreds of billions of dollars.
The rapid spread of the coronavirus pandemic across the globe hit the world economy, causing the largest post-war recession in history. Economies are sinking, governments and central banks have unleashed an unprecedented package of support for their economies, companies have gone bankrupt, and entire sectors are struggling to recover from the grim economic environment left behind by the deadly virus and restrictive measures to stop its deadly passage.
And yet in this financial catastrophe, the “gang of 5” of Wall Street, the so-called FAAMGs (Facebook, Amazon, Apple, Microsoft, Google), not only emerged unscathed from this catastrophe but excelled in a period, during which oil companies recorded losses of hundreds of billions of dollars, while at the same time the entire airline industry worldwide is on the verge of collapse.
The numbers and performance are not only impressive, but they are literally stunning.
The combined market value (capitalization) of these 5 technological giants has exceeded $ 7.5 trillion, until closing last Friday.
The stock value of 5 Big Tech after the closing on Friday 28 August 2020
|Apple||$ 2,135 trillion||$ 499.23|
|Microsoft||$ 1,732 trillion||$ 228.91|
|Amazon||$ 1,704 trillion||$ 3,401.80|
|Alphabet (Google)||$ 1,117 trillion||$ 1,639.43|
|$ 0.836 trillion||$ 293.66|
This means that the percentage of total capitalization on the Wall Street S&P 500 high capitalization index – the barometer index for global business – has risen to 25%, from almost 20% before the outbreak of the pandemic.
Practically, a quarter of the total capitalization of the S&P 500 belongs to the shares of these 5 tech giants, which could easily delete the 2 zeros in the index code and from S&P 500 to rename it to S&P 5.
The comparisons also cause vertigo, considering that $ 7.5 trillion is almost 1.5 times more than the total GDP of the 3rd largest economy in the world – the Japan; which in late 2019 was formed on $ 5.2 trillion.
Clearly there is an explanation for everything.
In the midst of the lockdowns, people were locked in their homes.
They did not move (fuel demand almost zeroed as with oil revenues) and did not travel (demand collapsed and with it the entire branch, the airlines).
On the contrary, people locked in their homes searched for products (in the Google search engine), placed orders online (Amazon), browsed more on social media (Facebook), many (those who were not destroyed by the coronavirus) bought new mobile devices (iPhones, iPads), listened to music, watched movies, paid with alternative payment methods (Apple Music, Apple TV, Apple Pay) and companies and individuals were forced to buy equipment, software and services for teleworking (Microsoft).
As a result, these 5 companies in the second quarter of 2020 when everything collapsed (US GDP in relation to the first quarter sank by 31.7%), have the best or one of the best quarters in their history.
The momentum is such that the achievements do not stop here.
On August 19, Apple breaks the barrier of $ 2 trillion in market capitalization and is the 1st US company that manages to surpass this milestone and 2nd in the world, as in December 2019, the oil giant Saudi Aramco succeeded momentarily exceed this unimaginable number.
It is recalled that August was again and specifically on August 2, 2018, when Apple became the first company in the world to exceed $ 1 trillion capitalization.
It should also be noted that not all of these companies were rosy, as 4 of them (Microsoft was absent) were recently summoned to testify online – due to the coronavirus – before a committee in the US Congress, on allegations that they are exploiting the dominant position in the markets they operate, using monopolistic practices to the detriment of their smaller competitors.
But alas, the course of Wall Street’s 5 Big Tech shows the following: the American economy, which in other decades was driven by the automobile industry, oil, and even defense armaments, is now a pure technology economy.