The information technology sector is more than 25% of the S&P 500 index, followed by consumer discretionary at 11.4% and communication services at 9.8%. Apple and Microsoft are in the information technology sector, Amazon is in consumer discretionary and Google is in communication services.
Despite that they’re in different sectors, these 4 made the most revenues among all tech-related firms, and are generally refered to as ‘big tech’ by the media.
How big are these tech firms really? In the last quarter, Amazon triumphed with more than $110B in revenue. Apple made just about $100B in revenue. Then the scale decreased dramatically to Google at $70B and Microsoft at $50B. The rest are all household names such as Salesforce or Oracle, but they are less than 10% of the size of Amazon.
How has their share price performed since IPO? Microsoft beat the pack with a whopping 360,428% total return including dividends since IPOed in 1986. Amazon followed 2nd but did less than half at 145,980%. Apple is 3rd at 138,830%. Google only IPOed in 2004 and since then did a 2,467% total return.
How profitable are these 4 tech firms really? The 4 charts below are hopefully self-explanatory. But in case it looks a bit overwhelming, here’re some places to focus on, using Apple as an example.
Apple’s revenue comes from devices and services. Devices have iPhones, Mac, iPad, etc. iPhone is by far the largest revenue source at Apple, at $50.6B, making up over 50% of total revenue, at $97.7B.
The gross profit margin of Services is incredibly high at 73%.
The operating margin is 31%, and the net profit margin is 26%.
Does it surprise you that Amazon’s AWS Cloud business is bailing out the rest of the company, which is what we know the most about Amazon, its e-commerce business? AWS Cloud made a $6.5B operating profit, whereas its e-commerce business lost $2.9B!
Google is very much still a giant in advertising. It made total revenue of $68B, and ads are $55B of that.
Microsoft has more diverse and equal revenue streams than the other 3 firms. Its net profit margin is the highest of the 4, at 34%.
Using our own rankings at Genuine Impact, Microsoft has the highest quality score at 96/99. Google follows closely at 93 and Apple at 92. Amazon is far behind at just 52. This is not a total surprise because Amazon has the lowest margin and return on equity, and neither does it pay any dividends, unlike Apple and Microsoft.
None of them is scoring high on value. Google is the best of the bad bunch.
Finally on momentum, again, none of them is particularly impressive. Apple is the best within the 4, but just has an average score at 42/99. The current market enviroment isn’t helpful to stocks that are expensively valued, and had weak momentum. This explains why the tech stocks this year are having a tough time.
We thoroughly enjoyed ourselves when creating these charts. Do you love them?
Have a good weekend ☀️
Truman & team
It'll be a better picture when we see these for annual numbers. The seasonality is so valatile quarter to quarter that in isolation they tend to look a little off.
Would you consider creating a version of these with full year figures? Microsoft earnings are coming up, maybe after that so you have best possible data?
No tax on the Amazon graph?