Microsoft is finally joining the ranks of Amazon and Apple. According to The New York Times, the tech giant is the third U.S.-based company to reach a market valuation of $1 trillion.
Although some would say it is a brief achievement (after all, the company was already valued at around $990 billion), it is definitely a huge milestone. More importantly, it represents an incredible recovery in tech stocks since their infamous plummet late in 2018.
Apparently, it is not only Microsoft. That is because both Amazon and Apple (with the former being the first one to hit the said valuation) are once again close to the $1 trillion market valuation mark. It is worth noting that both companies managed to hit the mark back in August last year. This happened after rising around 30 percent and 70 percent, respectively, this year.
Netflix, on the other hand, has managed to gain over 35 percent. As for Facebook’s stock, which became the most battered one among tech giants last year, it has skyrocketed to nearly 50 percent this year.
For Alphabet’s shares, they still remain to be the laggard of the entire group. Still, they are up to at least 21 percent this year. It is definitely not something to be disappointed.
All of the aforementioned six companies have managed to recover all of the nearly $940 billion in value. The latter, in particular, is something these tech firms lost over the last three months of last year.
The only catch, though, is that the investing landscape has been underpinning this rally since time immemorial. Nonetheless, it goes to show that the tech industry is in a better landscape now than in the past.
For several years, investors have been hungry for returns. Even more so, they decided to pile into shares of today’s largest tech companies, as well as push their value up. The same thing can be said for the broader stock market.
Unfortunately, everything resulted in a reverse by the end of last year. Considering the fact that fears of a possible recession existed, investors of these companies encountered a probing narrative. Given the existence of a slow-paced global economy, investors were concerned whether these companies can keep up when it comes to adding users and generating more sales.
Since the start of 2019, however, the landscape has become much better. Not only did these concerns fade, but all tech shares started to emerge. As a matter of fact, the Federal Reserve has decided to put a halt when it comes to interest rate increases. This is simply because both China and the U.S. have moved slowly to a trade agreement.
Apparently, this agreement has somewhat tamped down all fears of a possible recession. And, as a result, investors started to believe that the entire American economy will flourish. In addition, they are confident that the interest rates will never increase to a significant rate in the foreseeable future.
While all earning expectations have plummeted, Wall Street is still expecting profits from tech giants to grow faster when compared to the broader markets. And so far, the results from the first quarter have supported this narrative.
Microsoft, in particular, was able to reach its trillion-dollar mark just a day after it revealed a 19 percent earnings jump from a year earlier. This, in one way or another, is due to the company’s decision to transform into a cloud computing leader. Believe it or not, the tech giant has managed to beat every expectation there is in Wall Street.