Last week the big tech companies in the United States reported their earnings. Unsurprisingly, all companies that did so also beat expectations by a mile.
Apple, Google, Facebook, Microsoft, or Amazon, each company managed to report better than expected results on the back of strong demand for tech products. The coronavirus pandemic created a shift in consumer behavior but also a shift in the way people work.
The new lockdown measures announced in Europe will further improve the results for these tech giants with global operations. As such, the pressure on the Nasdaq 100 index, the one that fully reflects the tech sector in the United States, will likely remain to the upside, providing no exogenous shocks appear in the meantime.
Top Performers in the U.S. Tech Sector
Amazon leads the pack with an increase of over 35% in revenue in the first months of 2020 when compared to a similar period in 2019. A double-digit increase is already considered outstanding, and Amazon surpassed it easily. Last week the company also reported that it employed hundreds of thousands of people during the pandemic as it expanded its operations due to increasing demand for its shipping services.
Facebook comes in second place, posting a 17% increase in revenues over the same periods. More precisely, half of Amazon’s growth. As people were forced to spend more time indoors, they consumed more online products and services. Facebook benefited from increased traffic but also from an increased number of active users.
Microsoft comes in a close third place as the U.S. giant helped remote workers equip a new home office. It sold more hardware and software when compared to the first nine months of 2019, and its cloud services, Microsoft Azure, continues to expand at an incredible CAGR rate.
Alphabet and Apple managed only single-digit growth, but nevertheless, the two companies increased their revenues too.
The Nasdaq 100 index is the first index in the United States that managed to put a new all-time high during the pandemic, fueling the stock market recovery. At this point in the pandemic, the tech companies continue to benefit from it. Online products and services will likely remain in strong demand in the period ahead. As such, any dip in the aftermath of the U.S. elections might be perceived by market participants as just another opportunity to go long.