After the bell on Thursday, a trio of major tech companies released their earnings reports en masse. And the results were strong, with each firm beating both revenue and profit expectations set by Wall Street.
In unison Friday, the reporting firms, Microsoft, Alphabet and Amazon rallied to fresh highs. Their competitors that round out our collection of the biggest technology firms from the United States, a collective we loosely call the Big 5, also performed strongly on the day. That news broke on Friday that the US economy performed with confidence in the third quarter likely didn’t hurt.
That the biggest tech companies are doing just fine doesn’t shock. The tech industry’s stock market rally has gone on so long by this point that it can be difficult to recall a time when things were different. Indeed, the combined value of the Big 5 — our three recently-reporting firms, plus Apple and Facebook — has roughly doubled since early 2014, when the group was worth a more pedestrian $1.5 trillion.
Now comfortably north of $3 trillion in collective weight, it’s fair to ask why these firms have done so well in recent quarters. There is no correct single answer to a question with that much complexity, but we can take a lesson from each company’s quarterly results as a good starting point for comprehension.