Tech stocks charge ahead
The pandemic has catapulted Big Tech to new heights, with the five biggest tech companies taking in combined revenue of $322bn during the first three months of the year.

The pandemic has “catapulted” Big Tech to new heights, says The Wall Street Journal. Apple, Microsoft, Amazon, Facebook and Google-owner Alphabet have all reported record revenue growth in the first quarter of this year. Apple sold $47bn of iPhones during the quarter, a 66% year-on-year jump. Google’s advertisement sales rose by 32% on the year to $45bn. Combined, these five firms are now worth over $8trn, nearly one-quarter of the total value of the S&P 500.
The big five took in combined revenue of $322bn during the first three months of the year, adds Richard Waters in the Financial Times. Their joint after-tax profits soared by 105% on the year to hit $75bn. Lockdowns meant the tech giants enjoyed a superb 2020, but the conventional wisdom had been that things would return to normal this year. Instead, these numbers suggest that Covid-19 delivered an online “reset” to our lifestyles. The Big Tech firms will continue to profit from the world’s newfound “digital dependence”.
Expensive for a reason?
It’s now clear that the tech giants were a “raging bargain” when their shares fell during the early days of the pandemic, writes Eric Savitz in Barron’s. Since last March Microsoft shares have gained 85% and Apple stock has soared by 135%. The latest earnings data shows that cloud businesses are roaring (see page 22), while e-commerce continues to conquer all. Even PCs are enjoying record-breaking sales growth. Steep valuations and the growing clamour for regulation are risks, but there “are no better plays for the post-pandemic world” than Big Tech stocks.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Tech shares were the standout market performers last year but have been adapting to the unaccustomed role of “market laggards” in 2021, says Jeran Wittenstein on Bloomberg. Investors have been rotating into cyclical sectors such as financials and industrials, which stand to gain from reopening and look far cheaper in comparison. On 41 times trailing earnings, the tech-focused Nasdaq 100 is at its priciest since 2004. The big question is whether those firms can convince investors that the huge structural shift towards digital is enough to justify such steep valuations.
The rise of Big Tech has driven the long-term outperformance of US shares. As David Brenchley notes in The Sunday Times, the MSCI USA index has gained 641% since the 2009 low; other global markets have risen by 246% over the same timeframe.
On some metrics US shares are now more expensive than at any time in history save for the eve of the 2000 dotcom bubble implosion. Some asset managers think there are still pockets of value stateside. Perhaps. But remember that as the world’s “biggest and most high-profile market”, the US is thought to be the hardest for stockpickers to beat.
Sign up for MoneyWeek's newsletters
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Alex is an investment writer who has been contributing to MoneyWeek since 2015. He has been the magazine’s markets editor since 2019.
Alex has a passion for demystifying the often arcane world of finance for a general readership. While financial media tends to focus compulsively on the latest trend, the best opportunities can lie forgotten elsewhere.
He is especially interested in European equities – where his fluent French helps him to cover the continent’s largest bourse – and emerging markets, where his experience living in Beijing, and conversational Chinese, prove useful.
Hailing from Leeds, he studied Philosophy, Politics and Economics at the University of Oxford. He also holds a Master of Public Health from the University of Manchester.
-
Rachel Reeves faces £23 billion capital gains tax “black hole” – will she be forced to look elsewhere?
The fiscal watchdog has downgraded its forecast for capital gains tax revenues, leaving chancellor Rachel Reeves with £23 billion less than previously expected
By Katie Williams Published
-
Protests erupt in Turkey after the arrest of Erdogan's rival
Turkey's president has jailed his main political opponent, Ekrem Imamoglu
By Emily Hohler Published
-
Large cap stocks start to struggle – is it time for investors to reassess their focus?
Buying quality large caps worked very well last decade. A more volatile world will be a bigger challenge for these star stocks, says Cris Sholto Heaton
By Cris Sholto Heaton Published
-
How to generate income with fixed-interest investments
Public debt is overvalued, but other fixed-interest investments now look like a bargain, says Max King
By Max King Published
-
Three top-notch Taiwanese companies cashing in on the advent of AI
Opinion Eric Chan, investment director and co-manager of the Aberdeen Asian Income Fund, highlights three potential Taiwanese winners in the technology industry
By Eric Chan Published
-
Weight-loss drugs could revolutionise the economy – the investments to buy now
The new generation of weight-loss drugs are a boon for the overweight, but they also promise to change our relationship with food and revolutionise the economy
By Dr Matthew Partridge Published
-
Find tomorrow’s Asian giants while they are still smaller companies
Opinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
By Nitin Bajaj Published
-
AI will maintain Moody’s market lead, says Stephen Connolly
Opinion Veteran data provider Moody's has adapted well to the modern world, and is one of Warren Buffett’s longest-held investments
By Stephen Connolly Published
-
Is BlackRock World Mining gearing for a recovery?
Opinion After a frustrating year, BlackRock World Mining is positioned for growth and to capitalise on the sector's recovery
By Rupert Hargreaves Published
-
Should you limit exposure to US tech stocks?
An end to the AI boom would shake both US funds and global trackers. Here’s one way to trim exposure to US tech stocks
By Cris Sholto Heaton Published