25 January, 2024

Meta, Microsoft & Apple Continue To Hit Sky-High Valuations – She’s Got The Stocks – 25th January 2024

Australian stocks saw a modest increase in a somewhat lacklustre trading session on Wednesday.

The S&P/ASX 200 index, inched up by 0.1 per cent, equivalent to 4.3 points, reaching 7519.2. This marked the fourth consecutive session of gains, although only four out of the 11 sectors ended the day with positive gains, largely due to a rally in the mining and utilities sectors.

US stock indexes closed Wednesday below their session highs as the initial optimism driven by Netflix Inc.’s earnings subsided, and investors prepared for another round of significant quarterly reports. By the time markets closed, the S&P 500 had experienced minimal change, while the tech-focused Nasdaq 100 posted a 0.5 per cent gain. US Treasury yields increased, with the 30-year rate reaching its highest point this year, while the Bloomberg Dollar Spot Index recovered from its earlier declines.

Earlier data released on Wednesday showed that business activity in January had expanded by the most in seven months, which was seen as a positive indicator for stocks.

“Growth is up and inflation is down. The former puts a ceiling on how many cuts the Federal Reserve will do while the latter means the Fed still ends up cutting. A very good scenario for equity markets,” said Neil Dutta of Renaissance Macro.

Alphabet

Alphabet has decided to sever its contractual relationship with Appen, the artificial intelligence data company that played a crucial role in training Google’s chatbot Bard, shaping Google Search outcomes, and contributing to various AI products. This decision follows a “strategic review process,” with Alphabet informing Appen of the contract termination, set to take effect on 19 March, as disclosed in an Appen ASX announcement. Notably, Appen stated that it had received no prior notice or knowledge of Google’s intention to terminate the agreement.

Investors caused a sharp decline in Appen’s shares on Monday, pushing them down by 40 per cent to a mere 28 cents. This abrupt drop further intensified the stock’s 80 per cent decline over the past year.

Microsoft

Microsoft’s market capitalisation briefly exceeded US$3 trillion during intraday trading on Wednesday, as the shares rose over one per cent to reach approximately US$404 per share. However, it later retraced some gains and closed at US$402.56 per share. This milestone occurred nearly two weeks after Microsoft briefly overtook Apple as the world’s most valuable public company on 12 January. Apple has since regained the top position with a market cap of around US$3.01 trillion.

Microsoft’s shares have gained more than seven per cent year-to-date, with investors showing confidence in the company’s investments in artificial intelligence. Morgan Stanley analysts also expressed optimism, noting that Microsoft’s position and contributions in generative AI are strengthening. They increased their price target from US$415 to US$450, expressing confidence in exceeding consensus estimates. Microsoft is scheduled to release its fiscal second-quarter earnings on 30 January.

Apple

In recent Apple-related developments, the company finds itself compelled to make changes due to legal rulings. Initially, Apple adjusted its App Store policies following a Supreme Court decision to not hear an appeal in its legal dispute with Epic Games, the creator of Fortnite. Previously, Apple prohibited app developers from directing users to alternate in-app purchase platforms. However, Apple now allows developers to request permission for such links, albeit with a notable caveat: Apple will levy a 27 per cent commission fee for any transactions made through these alternative payment methods. Concerns have been raised by developers, who argue that this could hinder their ability to offer cost-effective options on the web.

Consider this astonishing fact: The combined market capitalisation of Microsoft and Apple, totalling US$5.9 trillion, surpasses the total value of all 225 constituents in Japan’s Nikkei 225 index by a remarkable US$1.5 trillion. It’s worth noting that Japan boasts the world’s second-largest stock market, making this financial comparison even more remarkable.

Company Name	Opening price	Closing price	Change (%)
Macquarie Telecom Limited (ASX: MAQ)	$68.50	$72.06	5.20%
REA Group (ASX: REA)	$175.39	$182.37	3.98%
Atlassian (NAS: TEAM) (USD)	$236.97	$243.08	2.58%
Xero (ASX: XRO)	$109.85	$113.00	2.87%
Carsales.com (ASX: CAR)	$31.52	$32.74	3.87%
NEXTDC (ASX: NXT)	$13.68	$13.66	-0.15%
WiseTech Global (ASX: WTC)	$71.66	$74.90	4.52%
Appen (ASX: APX)	$0.45	$0.34	-25.56%
Airtasker (ASX: ART)	$0.27	$0.31	12.96%
Telstra (ASX: TLS)	$3.96	$4.00	1.01%
Adobe (NAS: ADBE) (USD)	$596.10	$606.48	1.74%
Salesforce (NYSE: CRM) (USD)	$271.44	$276.88	2.00%
Apple (NAS: AAPL) (USD)	$182.68	$194.50	6.47%
Alphabet (NAS: GOOGL) (USD)	$141.47	$148.70	5.11%
Meta (NAS: META) (USD)	$367.46	$390.70	6.32%
Microsoft (NAS: MSFT) (USD)	$389.47	$402.56	3.36%
Amazon (NAS: AMZN) (USD)	$151.71	$156.87	3.40%
Nvidia (NAS: NVDA) (USD)	$560.53	$613.62	9.47%
Netflix (NAS: NFLX) (USD)	$480.33	$544.87	13.44%

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