The stock market hit nose bleed levels at the end of 2020, which took the market caps of many of America’s largest companies to records and allowed private company after private company enter the market with an IPO. At the end of 2020, four public corporations had market caps above $1 trillion, a figure not imaginable just a few years ago.
The pack was led by Apple Inc. (NASDAQ: AAPL), the only company with a market cap of over $2 trillion. It ended 2020 at $2.27 trillion. The figure was driven by the launch of the 5G enabled iPhone 12, massive holiday sales, a services business that has become its fastest-growing division, and a revival of Mac purchases. It ended the year with several open questions. One is whether Apple TV+ can compete with the Walt Disney Disney+, Netflix, and Amazon Prime streaming services. It is a crowded field, and Apple has entered it later than many others.
Microsoft Corp.’s (NASDAQ: MSFT)market cap ended the year at $1.68 trillion. It has been transformed into the world’s second-largest cloud computing company and a power in personal computing hardware. This is in addition to its position as the leader in PC and server operating systems. It has picked up market share against cloud leader Amazon.com, and its valuation as it enters the new year will depend to a large extent on that progress.
Amazon.com Inc.’s (NASDAQ: AMZN) market cap ended the year at $1.63 trillion. The public’s move to e-commerce drove a hockey stick rise in its revenue. This was particularly true over the holidays as people stayed out of stories due to the COVID-19 pandemic. Amazon remains a leader in streaming via its Prime Video service. Some analysts believe its market-leading cloud business AWS is worth as much as half of Amazon’s value.
Alphabet Inc.’s (NASDAQ: GOOGL) valuation at $1.19 trillion continues to rely on its search engine market share, a position which was attacked last year by the federal government as a monopoly. This challenge is a greater danger to its business than any competition. Its YouTube video site, the largest in America, amassed additional ad revenue. Its cloud business is also in the top five in terms of revenue. The question for Alphabet investors is whether the company can remain intact as the government challenge continues.
Each of these four companies trades at or near the top of its valuation. That is true for the stock market in general. If the market begins to fall this year, one question is whether these four companies lead it down, or are dragged down in a larger market sell-off.
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