Featured Image of this Article

Is Big Tech Untouchable?

Small, mid, and large-cap companies’ valuations have all taken a hit — are Apple, Amazon, Microsoft, and Google the last line of defense?

Big Tech has been lucky enough to weather the recent tumultuous markets relatively unscathed — apart from poor old Meta (NASDAQ: FB)

As the NASDAQ and S&P 500 flirt with bear market territory, can we depend on these few remaining reliable names?

David’s been clobbered, Goliath stands tall

Statistically speaking, these companies are actually trading at the lowest multiples of their entire stock market careers. If we band the merry brigade together, Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT), and Facebook have a combined cash pile of $138 billion on hand — that’s excluding the hundreds of billions each has in liquid short investments.

One would think that there are no macroeconomic concerns at all the way each of them has been acting either. A growing concern for all of the above is no longer winning in their respective categories — it’s actually finding new arenas to cast their market dominance upon. We can see this in respect to Amazon’s moves in healthcare through its Teladoc partnership, Google’s interest in cybersecurity through its acquisition of Mandiant, and Microsoft’s interest in the gaming segment through its buyout of Activision Blizzard
These giants are searching for any way they can to increase market share and dominance wherever they can — and to be frank — it’s working.

While the wheels are still in motion for several of these deals, you can be sure that the merger and acquisition teams at each respective organization have weighed out the likelihood that they’ll go through. There are no guarantees, but it’s looking relatively safe for the time being.

So what can we take from that? Bear markets are part of the cycle, and yes, Big Tech will probably be affected at least partially, but the long-term scope hasn’t changed even a bit, and barring Meta, Amazon, Apple, and Google are far from unattractive investments. Speaking for ourselves, we won’t be straying from our investment strategy as these leaders move further into value territory.

Read More