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Goldman Sachs is worried about the prospects for ‘mega cap tech’ stocks – 3 big risks

  
  Analysis
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Via a Goldman Sachs analyst research note ICYMI (on Friday) covering huge technology shares like Facebook, Apple, Amazon, Microsoft and Alphabet (Google).

GS nominate risk #1 as higher taxes, commenting on plans from the Biden administration for higher corporate and capital gains tax rates:
  • proposed corporate tax rate hiked to 28% (note that Biden has indicated a 25% compromise rate)
  • “FAAMG stocks have appreciated by $5 trillion during the last 5 years, accounting for 29% of the S&P 500 market cap increase during that time” … and thus a drop in these stocks will have an outsized impact on index values
#2 is the ‘higher interest rates’ usual suspect:
  • low rates have been a key support for valuations for over ten years now
  • the time of near zero rates could be approaching an end though
  • “All five FAAMG stocks …  are especially sensitive to moves in long-term interest rates“
#3 is increased regulation … GS go as far as to say “Looking forward, the greatest fundamental risk to the continued market leadership of the five largest companies appears to be the potential intervention of regulators
  • … legal battles and investigations over their market power and competitive practices ranging from commercial litigation to DoJ and FTC antitrust lawsuits to Congressional probes”
GS do note on #3 though that Google has soared since the launch of the DOJ investigation (in October 2020 … price from circa $105 to circa $135).
Via a Goldman Sachs analyst research note ICYMI (on Friday) covering huge technology shares like Facebook, Apple, Amazon, Microsoft and Alphabet (Google).

Huawei unveils own mobile operating system to rival Google’s Android

  
  Analysis
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China’s Huawei Technologies on Friday unveiled its own smartphone operating system which it said could replace Google’s Android in just “one to two days” if access to the world’s most popular mobile platform were blocked by the U.S.

The tech giant said its Harmony OS — pronounced Hongmeng in Chinese — was more flexible than Google’s Android, capable of supporting all devices from smartphones and smart speakers to wearables, smart displays and next generation automobiles. The system was revealed at Huawei’s annual developers’ conference in Dongguan by Huawei’s Consumer Electronics Group CEO Richard Yu.

“We can start using our Harmony OS anytime for smartphone and the migration from Google’s Android to our own Harmony OS is not that difficult… We can do it in one to two days,” Yu said.

Harmony OS is a key weapon in Huawei’s fightback against the campaign by the U.S. government to restrict the technological development of the world’s second biggest smartphone maker. It will allow the group to offer a common ecosystem of services and applications across all of its consumer devices.

However, in an implicit admission that Harmony OS could struggle in a consumer segment where 80% of all smartphones carry the Google system, Yu said Huawei would continue to prioritize using Android for its smartphones if allowed. (more…)

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