On August 19, 2020, Apple became the first company to reach a $2 trillion market capitalization. While this milestone is impressive in any circumstances, it’s even more noteworthy because the technology titan hit the $2 trillion mark during the COVID-19 pandemic.
Many Americans are still struggling in the midst of the worst unemployment situation since the Great Depression, while Apple and other big tech peers have seen their stocks hit all-time highs. This may be puzzling on the surface. But if you look at how large technology companies operate and make money, it’s easy to see why many investors are bullish on big tech even in the midst of the coronavirus pandemic.
Savvy Investors May Spot the Next Big Opportunity
Big tech isn’t the only sector that has done well during COVID. Many financial companies, for example, have fared well as commerce has increasingly moved online. There are definitely risks in the current economic climate, but there are also opportunities.
With any major shift in the economy and consumer habits, there will be winners and losers. A savvy investor may be able to spot the next big trend before everyone else catches on. If you do, you could have significant stock gains in your future. Using stock picking services such as TD Ameritrade‘s thinkorswim Web Platform can get you insights and information you may need to sport the next big thing.
COVID-19 Accelerated Big Tech Adoption
The internet has slowly changed how people live, from streaming TV services, ordering dinner to invest from an app on your phone. Even before COVID-19, for many people, it was unfathomable to live without these modern conveniences. Since COVID, we’re relying on these services even more than ever.
A great example of this is my mom. Before COVID, she had little interest in doing much on her computer. And she used her phone only for email, text messaging, photo sharing, and connecting with friends and family on Facebook and Instagram. She uses most of those quite a bit more now. And she even learned how to use “new” apps like Zoom and Grubhub.
Many parents used to monitor their kids’ screen time closely. But now many leave them to be babysat by Google algorithms on a device made by Amazon or Apple. Grandparents log into Facebook and Zoom to connect with friends and grandkids. Teens are glued to TikTok and shop online for new outfits to show off on their feeds. And they want to get off their online school to play an online game on their Xbox, which is owned by Microsoft.
Big tech has permeated nearly all of our lives in many new ways since COVID. And it’s likely not slowing down any time soon.
>>Further Reading: Large Cap vs. Mid Cap vs. Small-Cap Stocks
Businesses Need Big Tech More Than Ever
When a national emergency was declared in March 2020, offices shut down and sent their workers home with laptops in hand to keep the business running remotely. This has been far from a catastrophe. Many workers and companies have come around to the idea of working remotely.
To make it work, those companies need less real estate and more technology tools. That means using devices and services from big tech companies you likely know well regardless of where and how you work.
- Microsoft: The Windows operating system maker and Microsoft Office are essential for many workers, remote or in the office. Businesses use Microsoft-powered intranets and cloud storage solutions. And they connect with new workers via its social network, LinkedIn.
- Google: Gmail, Google Docs, Google Sheets, GSuite, Google Drive, and “Googling it” are all a daily part of modern work for millions of workers across a wide range of industries.
- Citrix Systems: This company’s software allows remote workers to connect to resources on a company network securely. For some remote workers, this is essential in their daily work.
- Slack: Slack was already an integral communication tool for teams who sit in rooms along the same hallway at the office. Now, with teams dispersed, it’s even more important.
Social Networks Have Replaced In-person Socializing
Still wary of visiting friends and family, many Americans use social networks as a primary way to connect. That means the advertising engines are busy showing us highly profitable ads. Some companies catch flack in the news for a possible negative role in the political climate. But there’s no question that the world is addicted to connecting online.
- Facebook: The owner of its namesake social network as well as Instagram, Facebook is the largest social network provider worldwide. It’s part of regular life for over 2.7 billion active monthly users. And all 2.7 billion get the privilege of viewing highly targeted advertising.
- Zoom: Before COVID, a lot of people hadn’t heard of Zoom. Now it’s a household name and vital for business and personal meetings. It’s free for limited use, but many people find a premium subscription well worth the cost. And Zoom’s stock has enjoyed the benefits.
Shopping Online Is Safer Than Shopping in Stores
Cautious households would rather order their groceries and other home goods online than stress over putting on a mask and navigating a crowded store. The big tech businesses that bring those deliveries to our doors are major benefactors.
- Amazon: Amazon is synonymous with online shopping for millions of Amazon Prime members. Prime Now offers two-hour delivery for many household items and essentials. And it delivers nearly any product on earth free in a day or two. So it’s no surprise this titan has become one of the most valuable companies on earth.
- Grubhub: Meal delivery services were a convenience before the pandemic. In an age where warry households don’t want to risk contracting a deadly virus, it has switched from “want” to “need” for many users.
- Walmart: Most people don’t consider Walmart to be a big tech company. But every day, it’s looking more like a big tech empire. After buying and absorbing online retailer Jet, Walmart has rapidly moved to compete with Amazon and other digital retailers to maintain its dominant position in how people shop for everything from clothes to groceries.
Written by Eric Rosenberg.
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