Tech Megacaps had a big 2021. What lies ahead for 2022.
As tech mega-caps continue to gain prominence in major market averages, the market-capitalization giants have actually performed widely in 2021 – and their outlook varies widely for 2022.
Let’s take a closer look, in order of size, at the eight tech stocks with valuations over $ 500 billion.
(ticker: AAPL) remains the most valuable company in the world, with a market capitalization of just $ 3 trillion. With a gain of around 36% year-to-date, Apple has outperformed both the 27% return on the
and the 23% rally on the
The bulk of Apple’s performance has been concentrated in the fourth quarter – the stock is up 27% since late October, a period in which the S&P 500 rose 11% more modestly. Several factors appear to be contributing to its strength: Apple continues to show robust growth for iPhone, Macs, iPads, wearable devices and services, while aggressively buying back its own stocks. And 2022 promises to be a great year for new products, with growing buzz, particularly around the potential launch of a headset for augmented and virtual reality applications.
This year’s rally follows gains of 82% last year and 89% in 2019, meaning the stock is up 365% in the past three years. Barring a sharp slowdown in iPhone sales, the channel is expected to continue in 2022.
(MSFT) has had a fantastic year, with the stock rising 54% year-to-date, bringing its market cap to $ 2.56 trillion. The world’s largest software company is seeing astonishing growth on a large scale, with revenue increasing 22% in the last quarter. Microsoft’s strong growth underlies continued demand for cloud computing: the company’s Azure business grew 50% in the September quarter.
Meanwhile, Microsoft is seeing strong demand for Office, Windows, Xbox and other parts of its business. With business spending likely to accelerate in 2022, there doesn’t appear to be any reason to believe Microsoft’s impressive growth will slow down next year.
(GOOGL) have climbed 68% so far in 2021, leaving its market cap at just under $ 2 trillion. There is simply no slowing down in demand for online advertising – and the company’s Google unit has largely dodged the pain inflicted on some ad-supported companies by Apple’s switch to new rules. that make it harder to track customer behavior on iPhones. Search activity is not as reliant as display ads for determining consumer intent, and it seems likely that some ad spend will shift from social media to search-based advertising. Growth is also robust in the company’s YouTube business.
Barring further regulatory challenges, it seems likely that Alphabet will continue to deliver strong growth in 2022 – Street’s consensus estimate calls for growth of 17%.
(AMZN) clearly lags behind megacaps, gaining just 5% year-to-date, leaving the stock with a valuation of $ 1.74 billion. It behaves like an unsuccessful home product inventory – growth in the company’s core e-commerce business has slowed as some shoppers have started to venture into physical stores for some. purchases. However, other elements of the activity remain strong, notably the
Cloud business, logistics and advertising web services. Investors have also taken into account the decision of founder Jeff Bezos to step down as CEO, replaced by former AWS chief Andy Jassy.
Another wild card: New Federal Trade Commission chairperson Lina Khan has extensive experience as an Amazon reviewer. The FTC has yet to rule on the company’s pending acquisition of the MGM movie studio, nor has it responded to a request from Amazon asking Khan to recuse himself from all matters relating to Amazon. , given his earlier writings on the company. Despite all this, after a year of poor performance, the title could be the most attractive of tech giants for 2022.
(TSLA) is back in the 13-digit market cap club, gaining 57% for the year, all in the second half of the year, including a 16% gain since Dec. 21. Founder and CEO Elon Musk appears to have ended a recent wave of share sales, and Street analysts have increased both their target prices and earnings estimates for the electric vehicle leader. Wedbush analyst Dan Ives, who has a target of $ 1,400 on the stock – a potential gain of more than 30% – believes the key may be demand in China.
(FB) is up 22% this year, taking its market cap to $ 967 billion, an impressive performance after a year in which the company has received a blizzard of bad publicity, especially a scathing Wall Street streak Journal titled “The Facebook Files,” which used leaked material to raise a myriad of questions about the detrimental effects of business platforms. Meanwhile, Apple’s efforts to prevent tracking of consumer activity on iPhones are hampering the company’s ability to target advertising, as regulatory pressures on the company continue to mount.
The company has also changed its name and launched a $ 10 billion metaverse-focused investment program, a bold call that may not pay off for years, if ever. That said, Facebook stocks appear relatively modestly priced compared to other Big Tech names, which makes them an intriguing option.
Two sets of tokens have emerged in the discussion of megacaps.
Stocks (NVDA) have had a fantastic run, up 132% for the year to date, bringing the company’s valuation to $ 750 billion. Once viewed primarily as a supplier of graphics cards used by gamers, Nvidia is now a key component supplier for cloud computing companies and a game on nearly every key trend in the semiconductor world, including mining. of cryptocurrency, artificial intelligence and machine learning, electrical. and autonomous vehicles, and even the metaverse. Sales for the last quarter jumped 50%. One caveat about Nvidia stocks is that the stock is trading at 28 times the current year’s estimated earnings, a valuation more often attributed to cloud software stocks than chipmakers.
And then there is
(TSM), which lagged behind, up just 12% year-on-year despite the huge global appetite for chips. The world’s largest contract chip maker, with a market cap of $ 635 billion, is building new facilities in an attempt to catch up with demand, while other players like
(005930. Korea) and
(GFS) do the same, and
(INTC) is also entering the market. One problem for Taiwan Semi’s actions is geopolitical: Tensions are mounting between Taiwan and mainland China. Any military action by China against Taiwan could disrupt the chipmaker’s operations, a risk factor not only for Taiwan Semi, but for the tech industry as a whole.
Write to Eric J. Savitz at [email protected]