EMERGING NEWS 

Apple, Amazon and Gilead Take Anchor leg of Earnings Race With a Big Lead

Back in October last year Apple and Amazon were at the head of a pack of internet behemoths but the tech giant’s tumble, Amazon’s stagnation and the demotion of Google parent Alphabet to second place have allowed Apple to dominate the rankings for nine consecutive quarters.

The trio’s total market capitalisation sits around $1.15tn which is almost 80% of the $2.5tn top 100 companies in the world have together. Even Facebook, at number nine in the chart, is worth in excess of $570bn, roughly a third of Apple’s value.

With Brexit dominating the headlines for many months leading up to its scheduled withdrawal from the EU on 29 March, the UK’s larger tech companies have had a relatively easy ride.

And though the chances of a cliff-edge Brexit remain slim despite the prospect of a no-deal, the outcome does mean that the UK – and for all the uncertainty it may cause – has a long-term obsession with Apple, Amazon and Alphabet, one that has helped propel them to first and second place in the rankings in nine out of the last 10 quarters.

Apple

Tech giant Apple had initially been neck-and-neck with Amazon with the latter edging ahead in October, but the collapse of Apple’s stock this year coupled with new tariffs for China has seen Amazon overtake its rival as the most valuable company on the US Nasdaq Composite.

Apple has seen its share price tumble from just shy of $190 to a low point of $133.87 in early February in a near 8% drop. Investors have been put off by disappointing financial results and the absence of a dividend increase.

But despite investors being put off by Apple’s shrinking share price, the company has been performing more strongly and its share price has now risen 13% over the last three months, firmly back in the list’s top 10.

Amazon

In October, Amazon was the number one company on the Nasdaq, surpassing market leader Alphabet, which moved down to number two. But with the incumbent still trading a massive 30% lower on its $1.31tn value than October’s peak, there is still huge uncertainty surrounding the results of the Brexit negotiations.

In the event of Britain being left without a trade deal with the EU, its economy is expected to suffer dramatically, impacting on consumer and business confidence. And with the greater uncertainty there will be fewer firms putting off investment decisions as they wait to see whether Britain is heading towards a full-blown recession.

That could see the situation at Amazon not immediately become a problem for the company – the Amazon Web Services cloud services division and advertising business are highly lucrative and could easily make up for a shortfall in the UK economy.

But even if there is a no-deal outcome, the long-term future of Amazon in the UK is very much dependent on the quality of its labour force. The extent to which wages are paid in the UK will be determined by the number of immigrants that arrive on a visa route. And uncertainty will lead to fewer workers coming to the UK with different cultures, therefore impacting the productivity of the labour force overall.

Gilead

Gilead, along with Apple, has also been one of the top performers over the last year with a one-year rise of over 75% relative to its April 2018 low point. The fact that this rise, despite relatively modest gains in the market has seen the company take the number one spot could mean the company has reached an inflection point.

The value of Gilead has been boosted by a successful launch of its Hepatitis C drug Harvoni which boosted the company’s sales by almost 50% in 2018. That success was not due to increased sales of a single product, but rather the company’s ability to combine multiple products to make the drug more cost effective and increase its uptake.

The company is also pushing into Europe with its HIV drug CZ75, it recently launched its first ever Hepatitis B drug- CCH01 and there are growing hopes that the company will be able to launch a pan-carrier Hepatitis C treatment in the coming months.

The stocks of the smaller companies in the Fortune 100 are represented on each slide of the chart with the greater the percentage increase compared to its previous year it is a sign of the performance of the companies in question.

Related posts

Leave a Comment