23 Apr 2020
Posted in Coronavirus
23 of top 25 global technology companies by market capitalization in Q1 2020 report major QoQ decline
The COVID-19 pandemic has shredded the performance of shares of the world’s top 25 technology* companies, with 23 reporting a major quarter-on-quarter (QoQ) decline in market capitalization (MCap) for Q1 2020. NVIDIA and Tencent were the exceptions, posting QoQ growth during the same period, according to GlobalData, a leading data and analytics company.
NVIDIA, with a 12% of year-on-year (YoY) MCap growth, entered the top ten, replacing Oracle, which slipped to 14th position.
The top 25 technology companies by MCap witnessed a 11.9% decline in aggregate MCap, as of 31 March 2020, which stood at US$6.6 trillion – as compared to US$7.5 trillion as of 31 December 2019 (Q4 2019). Over 50% of these companies reported more than a 15% decline in their MCap. The top two firms, Microsoft and Apple, accounted for approximately 35% of the cumulative MCap of the top 25 companies, and recorded a respective 0.3% and 14.7% decline in their QoQ MCap.
The shutdown of Foxconn factories, which primarily manufactures iPhones, and the closure of Apple’s retail stores in China and other regions amid the COVID-19 outbreak seemed to dent investors’ confidence, with company’s shares nosediving over 13% in Q1 2020. The decline in Apple’s share price resulted in Microsoft replacing the Cupertino-based company at the top of GlobalData’s ranking.
Microsoft’s announcement of dividend on February 19 coupled with the 775% increase in usage of its cloud services in regions that were under lockdown, successfully helped regain investors’ confidence.
Major semiconductor companies, including Broadcom, Qualcomm, Texas Instruments, Taiwan Semiconductor, Samsung and Intel recorded over 12% decline in MCap, primarily due to increased uncertainty around demand in the global market.
NVIDIA remained the exception amongs major semiconductor companies with an 11.8% rise in share price during Q1 2020. This could primarily be attributed to revenue growth of 41%, and a 136% increase in non-GAAP earnings per diluted share in Q4 2019, compared to a year earlier.
Apart from NVIDIA, Tencent was another company with positive growth in Q1 MCap, which could be attributed to over a 20% increase in revenue and net profit in both Q4 2019 and the fiscal year (FY) 2019, which propelled investors’ confidence.
Advertisement-related revenue uncertainties at the backdrop of COVID-19 and headwinds such as General Data Protection Regulation (GDPR) implementation pulled down the share prices of companies such as Alphabet and Facebook.
Meanwhile, the International Monetary Fund (IMF) downgraded its world economic outlook growth projections for 2020 by 6.3 percentage points to -3% in April 2020 from its earlier projections in January 2020 due to COVID-19. Economic slowdown is expected to impact companies in all sectors, but tech stocks may experience relatively fewer headwinds due to their increasing role in containing this health crisis.
Technologies such as blockchain are not only helping governments to identify COVID-19 red zones, but also providing scientists with a reliable data platform in the form of a shared ledger that facilitates their research. Artificial intelligence (AI) enabled supercomputers are leveraging public cloud infrastructure to help scientists in processing massive numbers of calculations related to bioinformatics, epidemiology and molecular modeling in a very short span of time to analyse the impact of drug components on COVID-19.
*Technology companies include software and hardware developers, IT services providers (including internet-based services providers), and electronics manufacturers including semiconductors, mobile devices etc.