The Race to a Trillion
aboveavalon.com
aboveavalon.com
Oh dear, what drivel. By that logic, BP is not an oil and gas company, it's logistics company helping people and goods get to where they're needed the most. And Deutsche Bank isn't a bank, it's a charity focused on making people's and companies' dreams come true (for a small fee).
Please spare me this bullshit.
But I think this analysis overlooks the ways where these tech companies do sort of compete: search advertising is a duopoly between Google and Facebook; search has some (very weak) competition from Microsoft and Amazon; cloud services are competitive between Google and Amazon... I think the stronger pattern is Alphabet is in everything and in some way competing with every other giant.
IBM Cloud revenue is a head-scratcher. I've had to use them in the past, and while they have some unique features, it's hard to imagine anyone choosing them unless they had an explicit need for those features, or were forced into using IBM due to existing business relationships. I guess corporate inertia (possibly from the SoftLayer days) is a hard thing to overcome.
https://www.forbes.com/sites/bobevans1/2018/07/11/microsoft-...
https://www.forbes.com/sites/bobevans1/2018/05/21/top-cloud-...
https://www.forbes.com/sites/bobevans1/2018/04/27/microsoft-...
At my company, we use GCP almost exclusively with preembtible TPUs as our primary compute for training models. It's not cheap, but you can't beat the performance and quality. Plus when you compare it with how much the engineers here are getting paid, it's a drop in the bucket ultimately.
I have worked in a number of industries and rarely needed any ML (though it may be coming). Most folks need clean data and linear regressions in my experience.
The problem with this article, the drivel, is projecting nonsensical narratives onto these entities.
So while Google is certainly not a customer facing data services company, I still have no idea how they see themselves. Which would be useful information.
A better (actionable) external narrative is Scott Galloway's The Four. I have no idea if Galloway's analysis is closer to the mark. But at least it's self-consistent. [http://www.thefourbook.com]
One thing that should be worth looking at given where we are in the economic cycle is how procyclical these businesses are. They didn't suffer much in the 2008 crisis as they were in full expension mode, but now these businesses are starting to be mature. Ads and retail are certainly very procyclical. $1000 smartphone too I presume. Cloud should be more stable, depending on how much of their income is VC funded loss making startups. Business license should be fairly stable.
(Just like a Million ain't what it was anymore at family level[1]).
[1] https://www.statista.com/statistics/300451/us-millionaire-ho...
That's a far fetched premise given several of those companies are likely to hit that line in the next few years. It's not like Apple is $800b away from the line. Their stock needs to merely move up 7%. Amazon needs to move 15%.
At a minimum Apple, Amazon, Google, and Microsoft look poised to easily hit a trillion dollars in the not very distant future, obviously barring a market crash (and nobody knows when that is coming). A trillion dollars will still be a trillion dollars, so to speak, in five years.
But today, $1 trillion may only be 0.000x% of the monetary supply today.
It’s true that government measures of inflation has been fairly low. But those measures (since the 2000s) have been hedonstically adjusted; meaning say a laptop that’s 10% faster is considered 10% cheaper even if the price is the same.
The article mentions this:
> An arbitrary race that many have been following on Wall Street is, which company will be the first to reach a trillion dollar market capitalization? [...] the race to a trillion dollars ends up hiding a much more interesting development that has been unfolding on Wall Street
(emphasis mine).
If there's a big correction, these stocks might get back to a point where the trillion goal is again very far.
Anyone knowledgeable willing to share further insights and opinion?
That's personal wealth, not including assets held by corporations. The fundamentals are that there's a surfeit of cash to invest globally. The predominate driver of growing wealth is the emergence of the developing world, not QE and other monetary policies. A correction will come, but it won't be so dramatic as to take the bottom completely out from underneath existing assets prices (not unless there's some global financial calamity), especially strong ones like Facebook or Amazon (Twitter is a different story). There's just too much money and not alot of places to park it with stable markets and/or high rates of return. The U.S. offers both. I wouldn't be surprised if in the next downturn stocks like Facebook remain buoyant and its everybody else that suffers.
Are not all assets held by corporations also personal wealth in the form of shares?
I'm not well versed in corporate finance, so correct me if I'm wrong, thanks.
That said, I think wahern's general point is still sound.
You can borrow against your shares at the same time Apple can borrow against its cash holdings and, ceteris paribus, the end result will be more debt than Apple's cash reserves even after considering a reduction in Apple's stock value. And this debt can be used to buy more assets. (Basically, fractional reserve isn't just a banking thing. It's inherent to the mechanics of capitalist finance.)
In addition, the ability to do this enhances capital allocation efficiency, which adds independent value to the entire system.
So there's not a simple function mapping corporate wealth to personal wealth, though you certainly can't simply sum corporate-held assets to personal wealth. I'm happy to be corrected for the implication.
I sold almost everything. I don't try to call the very tops of markets, it's too hard. Having things ready when the pullback happens is good enough for me.
That's correct. But is all that money a representation of real wealth or is it a bubble?
And from what I've heard myself, he says he worked in Windows and understands technical issues but his linkedin profile says he was a Business Development Rep ((who're always under the sales org and not a specific product org)).
If your measure of "losing" is "not #1" then everyone is a loser in at least one of your categories, especially Apple.
And remember that Oracle is an enormous company just by focusing on enterprise, but MS is way larger just in enterprise. Sharepoint, SQL Server, etc etc.
And even though they are a very distant second in search, that product alone produces more revenue than most companies can ever dream of. It is actually a huge financial success.
Amazon has shown that it can use its money to profitably invest in other verticals and its a capital intensive business.
Google probably should start paying dividends. They still haven’t shown they can invest money to diversify from being an ad business into other profitable verticals.
Provocative, but sorta true. The company that pretends to be the most innovative in the world might not do so well if they have the image of paying out dividends.
75% of the world's population has a cell phone (https://www.rferl.org/a/report-says-75-percent-of-worlds-pop...). No matter what any consumer electronic company introduces in the next 5-10 years, I doubt that it will have more impact than the consumer smart phone trend the iPhone started.
What company has been innovative in the consumer electronic space in the past decade? No matter what Apple does, I don't realistically see Apple or any other company introducing a consumer electronic product that is as successful (revenue wise) in the next decade.
We build technology to help people change habits, with instantaneous positive and negative feedback, and a digital currency called Volts[2] that rewards and pays people to do good habits.
Our goal is to sell the product in the initial phases (next 5-7 years), and eventually give them away to everyone in the world. One of our core products (unreleased) attaches directly to iphones and android -- I can't give too many details, but it becomes part of your phone.
Again, I'm extremely biased. But they say the best way to predict the future is to create it, so ¯\_(ツ)_/¯
I don’t think they can just throw more people at intellectual based innovation. There are only so many people in the world that they can hire and hiring more people brings its own issues - the whole Mythical Man Month.
I would imagine even prototyping and developing new hardware would be done by a relatively small team.
(I suppose the answer will be something to do with tax treatment, and if so I'd say that in this case the taxes are all wrong and should be simply a fixed proportion of income however it is gained or earned).
And they are totally different businesses from Google search, sharing only a similar monetization method(ads),but that's such a small part of the whole.
As far as YouTube, indications are that it is only slightly above break even and that it accounts for around 10% of Google's ad revenue -- not profit -- https://nypost.com/2018/02/01/youtube-ad-woes-hurts-profits-...
[edit: sorry, my mistake: the market cap reported is not actually outstanding shares times price, pointed out below]
You are right that there are two public tickers for Alphabet, GOOG and GOOGL, however the market cap you see when you search for their ticker is for the whole company, not the class alone.
Also, Alphabet has 3 classes of shares. A (GOOGL), B (privately held), and C (GOOG)
I assure you, the market cap is roughly $870B as of this writing.
Actually, market cap is outstanding shares times price. It is a value per company, not per class/type of shares traded. Sort of like how the same CEO would be listed under GOOG or GOOGL. You'll see the same market cap listed under GOOG or GOOGL.