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Fifteen years is a long time in the tech industry. Facebook is 15 years old and is the fifth largest US-listed company. The iPhone is 12 years old, Amazon Web Services is 13 years old, Android is 11 years old and YouTube is 14 years old.
The GAFA stocks - Google, Apple, Facebook and Amazon - have disrupted markets and changed how we live our lives. In the January 2020 issue of Master Investor Magazine I have taken a close look:
December quarter earnings
The Four will soon report December quarter earnings. Google, Facebook and Amazon have financial years ending in December. Apple's financial year ends in September. The financial numbers will be impressive.
Apple will be bolstered by the release of the iPhone 11 and the AirPods Pro. Facebook and Google (Alphabet is the holding company) are underpinned by the growth of online advertising. Amazon is benefiting from the growth of cloud storage.
All four companies compete hard for new markets and benefit from powerful tailwinds.
Upcoming reporting/AGM dates
Apple (AAPL) - First quarter results January 28, Annual General Meeting on February 26
Facebook (FB) - Fourth quarter and full year results January 29
Alphabet (Google, GOOG) - Q4 results likely in early February
Amazon (AMZN) - Q4 results likely at end of January
Book inspiration for this article
This feature was in part inspired by Professor Scott Galloway's book - the four: the hidden DNA of Amazon, Apple, Facebook and Google. Professor Galloway makes the case for breaking up the Four in page 255 of his book.
Galloway states (P279):
Why should we break up big tech? Not because the Four are evil and we're good. It's because we understand that the only way to ensure competition is to sometimes cut the tops off trees, just as we did with railroads and Ma Bell.
This isn't an indictment of the Four, or retribution, but recognition that a key part of a healthy economic cycle is pruning firms when they become invasive, cause premature death, and won't let other firms emerge. The breakup of big tech should and will happen, because we're capitalists. It's time.
On Twitter (@profgalloway) Professor Galloway has stated that breaking up the big four won't destroy value for their investors. I am not so sure a breakup will happen because the Four appear to benefit consumers. The book:
The impact of the GAFA stocks is important to recognize. They will continue to change both the UK high street and traditional media outlets.
The age of the Internet has allowed US equity markets to outperform.
The GAFA stocks have upended how we live our lives in less than 15 years. We find information on Google/YouTube, order on Amazon, connect on Facebook/Instagram and rely on smartphones.
Ask not for whom the bell tolls, the GAFA stocks toll for thee.