The new year often means new resolutions for many people. For Apple (NASDAQ: AAPL), one of the companies we’re reviewing, it also means further antitrust investigations by the U.S. government. It will be joining the other two, Amazon (NASDAQ: AMZN), which is in the midst of one, and Microsoft (NASDAQ: MSFT), a veteran of such procedures from 20 years past, in our discussion. We all know that these companies are part of the FAAMG group of stocks and as such are no-brainers for investment consideration.
Amazon has had a spectacular year, with both of its main sectors making out gloriously from pandemic-influenced behavior. Since people were forced to stay at home, they chose the platform to shop on and companies chose it for its scalable cloud services for their work-from-home infrastructure. The company, valued at over $1.5 trillion, is a behemoth of products and services as you can literally buy anything from Amazon or its third-party sellers on its platform, including its own line. And that’s where the problem comes in: Amazon is not only a retailer but a seller as well and allegedly uses proprietary algorithms to research popular third-party sellers and then undercuts them on pricing and goes as far as referring to these businesses as ‘internal competitors’ in private documents. Classic monopolistic behavior that the EU is aggressively investigating and the U.S. is expected to continue into the new year.
Amazon’s stock price is up nearly 70% year-to-date (YTD) and its revenue is expected to be roughly $380 billion this year, an increase of over 35% from last year. Additionally, the company made more money in advertising this year as its revenue in the space is nearly $13 billion, up over 20% from last year, and is expected to own nearly 16% of the U.S. market share in ads by next year. That’s not all as analysts are expecting earnings to increase at an annual rate of 36% for the next five years.
Apple’s accomplishments in the year are not only limited to its $2 trillion valuations but also the release of Apple One, a 5G iPhone, a stock split, its most expensive AirPods, and pandemic-fueled sales of iPads and Macs. Having faced antitrust scrutiny this year over its App Store, the company will be further investigated in 2021 over its Apple Pay product, which authorities are looking into for impeding competition. Financially, the company is performing like a rock star as its stock price is up over 70% YTD and is expected by analysts to surge another 32% next year thanks to the iPhone 12 supercycle.
The company’s Services division is expected to grow further in the coming years’ thanks to Apple’s consolidated Apple One offering, boosting the sector’s overall revenue contribution higher than its near 23% in the last quarter at an all-time high of $14.5 billion. The company is expected to release updated versions of its iPad, AirPods, iMac, and MacBook products in the coming year, no doubt boosting sales further from its loyal consumer base.
When Microsoft successfully appealed a ruling that called for it to be split in two, with one division concentrating on the Windows operating system, and the other on software, its leaders breathed a sigh of relief. Today, the company continues to dominate in the software space and is second after Amazon’s Web Services in the cloud sector with its Azure platform at 19% market share. Microsoft, in its race with Amazon to be the next $2 trillion company, has seen its stock price rise nearly 38% YTD and its revenue grow by almost 14% from last year, and analysts are predicting a 10% boost from that in the next year.
Azure is the fastest growing cloud service of all providers and is expected to continue to boost Microsoft’s revenue in the near future and beyond as it eats up AWS’s market share.
These three tech giants are leaders in their respective fields and are safe investments. The only blemish two of them have is their antitrust procedures. I feel that like Microsoft, the worst that will happen will be tantamount to a slap on the wrist, resulting in a cash settlement, and the companies will ultimately not be affected.
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Contributing Writer at MyWallSt
David fell in love with the stock market in 2000 after making $30,000 overnight on Techniclone. His favorite stocks today are Netflix, Google, Amazon, and Apple as they are the market leaders in their sectors and are safe long-term investments.