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Tech companies have been taking the heat over the past year with massive valuation erosion and plunging stock prices amid rising interest rates.
Even in a recession, however, tech companies are still among the largest in the world – worth over $1 trillion!
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Here we’ll look at how the top tech companies have performed, how their values stack up, and dive into some of the metrics that show whether they’re a good value now — or still at a premium.
Apple (AAPL)
market cap: $2.5 trillion
Price-to-earnings ratio (P/E ratio): 26.4
Layoffs (2022-2023): None
Fall in stock price (from all-time high): 14%
Apple is the most valuable company in the world (in terms of market capitalization), worth over $2 trillion. Apple continues to pump out innovative products with its flagship iPhone and Mac computers, helping them retain their top positions.
In 2022, Apple’s share prices are set to decline by about 25% as rising interest rates slow growth, and investors turn to more stable investments. But it has recovered slightly in 2023, and is down about 14% from its previous all-time high stock price in January of 2022.
Apple is one of the only tech companies to avoid mass layoffs, and has implemented several cost-cutting measures to keep it that way.
Apple’s price-to-earnings ratio of 26.4 seems more in line with industry standards than some of its tech peers, which saw greatly inflated valuations a few years back. And while that’s still historically high for the tech sector, it means Apple is more valuable than some other tech companies.
Overall, Apple remains the model tech company for investors, showing stability in the face of economic turmoil. And with a large cash reserve and an innovative product team, they are poised to continue growing in the years to come.
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Microsoft (MSFT)
market cap: $ 2 trillion
Price-to-earnings ratio (P/E ratio): 30.2
Layoffs (2022-2023): 10,000
Fall in stock price (from all-time high): 21%
Microsoft is the second most valuable company in the world, with a market cap of $2 trillion and revenue of $200 billion per year. Microsoft offers a wide range of products including personal and business software as well as computers, tablets and Xbox gaming systems.
In 2022, Microsoft’s share prices are set to decline by about 35% as most of the tech sector gets crushed by rising rates. In 2023, the stock corrected slightly, and is now down about 21% from its previous all-time high in 2021.
In light of low valuations and rising cost of debt, Microsoft has laid off 10,000 employees as a cost-cutting measure, with the layoffs scheduled to be completed by the third quarter of 2023.
Microsoft’s P/E ratio of 30.2 is slightly higher than the industry, but it is well below the 50+ PE ratios seen in 2017 and the 35 in December of 2021. This may mean that there is a slightly higher value than Microsoft. For earning from it.
Overall, Microsoft has seen a greater decline than Apple, but is still one of the top companies in the world for a reason. Microsoft is well poised for the future of technology as they bet on artificial intelligence and the metaverse.
Alphabet (GOOG)
market cap: $1.3 trillion
Price-to-earnings ratio (P/E ratio): 21.9
Layoffs (2022-2023): 12,000
Fall in stock price (from all-time high): 33%
Google is one of the world’s only trillion-dollar companies, and the world’s fourth most valuable company by market cap. Google is the search engine king, capturing over 90% of the worldwide market share for search queries.
Google stock prices have declined by 40% between January and December of 2022. And Google stock is still down, down 33% from its previous all-time high price in February of 2022.
In response to rising rates, Google announced plans to lay off 12,000 employees in 2023, the most of any tech company ever.
Google’s price-to-earnings ratio of 21.9 is reasonable, compared to the inflated ratios of 30 seen in 2020 and 2021. This means that Google can be given a fair price based on their earnings and sector.
Overall, Google has had no challengers in the search engine arena, and is branching out into other products, including cloud services, Internet services, and hardware products. But with competition heating up in the AI, video (TikTok) and hardware spaces, Google faces some challenges to keep growing.
Amazon (AMZN)
market cap: $996 billion
Price-to-earnings ratio (P/E ratio): 77
Layoffs (2022-2023): 27,000
Fall in stock price (from all-time high): 48%
Amazon is the fifth most valuable company in the world (by market cap), valued at over $990 billion. Amazon is the ultimate online shopping company, offering every product under the sun, delivered right to your door. It also has a media arm and a grocery store (Whole Foods), making it a powerhouse company.
In 2022, due to economic headwinds, Amazon saw its first annual loss since 2014, and the stock price fell nearly 50%. Part of this loss was due to unrealized losses for its investment in electric vehicle maker Rivian.
But Amazon stock prices have only recovered slightly, and are still down 48% from their November 2021 all-time highs. Amazon also announced plans to lay off 10,000 employees in 2023.
Amazon’s price-to-earnings ratio of 77 is astronomically high for the overall sector, at nearly 3 times that of its closest competitors. But this is partly due to their continued investment in the company, which is slowing earnings, but investors see these investments paying off in the future.
Overall, Amazon may be overvalued to some, but others see the future as a huge growth opportunity for the tech giant.
Meta Platform (Meta)
market cap: $520 billion
Price-to-earnings ratio (P/E ratio): 23.3
Layoffs (2022-2023): 21,000
Fall in stock price (from all-time high): 48%
Meta Platforms (Facebook) is the largest social media company in the world, and has over 3 billion users on its platform. Facebook was the original company, but it has grown and evolved to include Instagram, WhatsApp, and other products and services.
In 2022, Meta Platforms’ share prices fell nearly 63% due to a missed earnings report, heavy losses on its Reality Labs investment, and overall economic conditions. Stock prices have recovered slightly, but are still down 48% from their August 2021 all-time high.
Due to these heavy losses, Meta has projected to lose more than 20,000 jobs by 2022.
With the massive price drop, Meta’s price-to-earnings ratio has come back down to earth, settling at around 23. Some may see this as too much, but investing in meta is betting on the future of the metaverse at this point, so there is a potentially massive upside. Overall, the Meta platform remains a social media powerhouse, but the competition is heating up.
ground level
Tech companies have taken a lot of heat over the past two years, but some of the biggest are doubling down on innovation and investing in the future. With Microsoft and Google focusing on artificial intelligence, and Apple and Meta focusing on virtual reality and the metaverse, exciting things are coming.
However, investing in these companies requires understanding their valuations, future growth potential and market competition. While a fall in the stock price may make one want to jump in and invest, things can still go further down. As always, education and understanding the risks of individual stock investing can help you make smarter money decisions.
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This article was originally published on GOBankingRates.com: How much Amazon, Apple, Meta and the biggest tech companies are worth
Source: finance.yahoo.com
