We’ve now heard from about half of the S&P 500 companies on Q4 earnings. And about 70% of those companies have beat Wall Street’s earnings estimates.
We’ve heard from the banks, early on, which broadly painted the picture of a healthy economy. And now we’ve heard from the dominant tech giants/ disrupters of the past decade.
Facebook beat. Amazon beat. Google beat.
But times are changing.
Remember, the regulatory screws have tightened on the tech giants over the past year. It was a matter of when the market would finally price OUT the idea that these industry killers would be left unchallenged, to become monopolies.
With that in mind, back in early October, when market risks were building (from China, to interest rates, to Italy, to Saudi Arabia), we looked at this big and vulnerable trendline in Amazon.
Here’s the chart on Amazon now …
The break of that line gave way to a 30% plunge in what was the biggest company in the world.
Bottom line: Amazon, Facebook and Google have entered into regulatory purgatory — after being largely left alone for the past decade to nearly destroy industries with little-to-no regulatory oversight. Costs are going UP and will keep going up..
With all of this said, the stocks of these tech giants might take a breather, but given their scale and maturity, more regulation actually strengthens their moat. There will never be a competitor to Facebook
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