The guard changed slightly at the top of the American stockmarket on Monday – Amazon hit a record high and pushed its market value past that of Warren Buffett’s Berkshire Hathaway and into the top five of all US companies.
Amazon shares rose 1.1% to close at $753.78, which gave the company a closing market cap higher than $US350 billion for the first time, at $US355.7 billion.
That move pushed Amazon ahead of Berkshire Hathaway which ended with a market cap of $354.9 billion, according to FactSet data.
But on Tuesday Berkshire shares rose and Amazon shares fell, taking its value back below that of Berkshire – $US352.5 billion to $US356.5 billion.
But the reporting season now underway is likely to see more changes at the top.
Alcoa kicked off the reporting season yesterday morning with a better than expected result, but it will not feature at all among the likely drivers of the market.
It will be the handful of tech giants that will be the most watched companies by investors and analysts – Amazon, Facebook, Alphabet, Microsoft and Apple.
These companies are the drivers of the US market and their earnings reports will go a long way to telling us if the record level for the S&P 500 is sustainable.
Last Friday, Amazon’s market value first moved past that of Warren Buffett’s Berkshire Hathaway and into No 5 spot on the most valuable listed US companies.
That situation didn’t last long and Amazon ended trading last week on $US351.9 billion, just behind Berkshire Hathaway on $US354.18 billion. That was the first time Amazon shares have topped $US350 billion.
But it should be pointed out that Berkshire Hathaway’s value would be considerably higher its assets were valued as tech stock assets are.
Its huge $US100 billion plus float in its insurance companies is a liability (which it is in accounting terms), but in actual value to the company, it is in the books at zilch – and yet it continues to finance Berkshire’s acquisitions. And many of those acquisitions are in the books at historical, rather than current values.
Another pair to watch are Apple ($US533 billion at the end of trading this morning, our time) and Alphabet (nee Google) on $US495 billion. Another weak quarter for iPhone sales and the owner of Google could very well move past Apple into top spot.
There have been reports of US analysts having difficulty getting a handle on iPhone sales in the second quarter because of the uncertain situation in China.
Apple has already guided the market to accept a fall in iPhone sales this quarter – the question for the market is how low will those sales go?
Microsoft is valued at $US418 billion and investors will quiz management on the $US26 billion purchase of LinkedIn and more detail on how the companies are to be integrated.
Fourth on the market-cap list is Exxon Mobil, worth $US393 billion at the close on Friday. GE, another big industrial, has been left behind by the rise of the tech giants. GE was valued at $297 billion at the close on Friday.
But also watch Facebook – it’s valued at $337 billion, and remember how its shares sprinted higher following its first-quarter report.
A relative tiddler to watch is Netflix – at$US41 billion its a fraction of the size of the others, but its streaming video business has been a market darling now for more than two years.
But the market is now wondering if its stellar growth, especially inside the US, is close to peaking.
International subscriber numbers will have grown last quarter because the company opened in more markets this year, but the figures will have to be convincing.
But remember if the pecking order in the top 10 doesn’t change in this reporting season, then we will know the reports have been weak and not very convincing – and it could be a sign that tech stocks like Facebook, Apple and Amazon, the growth engines for Wall Street in the past few years, are running out of juice.
