For years I feel like I’ve been discussing the “ecosystem play” and I certainly wish I had been able to buy an ETF that held all those plays. In this 2013 post, I didn’t include Microsoft but started including it in 2014 as it became clear it would successfully adapt to this new digital world:
I’ve also argued that very few other players will manage to thrive in an environment where the ecosystem players are able to leverage their power and users and that theme clearly remains relevant. Yesterday, Google and Amazon both reported earnings and both crushed it. They are all fighting their own battles but each have their own clear strengths.
How are these 5 ecosystem plays doing now? Take a look at the largest companies by market cap as of April 26th:
Of course, once that data incorporates Amazon (AMZN) and Google (GOOG) market gains at the end of the day, the picture will be even more clear. Even Alibaba (BABA) which stands at #10 could also be included in the “ecosystem” play although it would be the Chinese one. Impressive isn’t it? I also expect Facebook (FB) to deliver very strong results next week.
Here is the return since that 2013 post:
The Most Surprising Part? It’s Still Very Early
I’d argue that even though these companies are already the top market caps and have done incredibly well over the past few years, they still have incredible upside. I’ve just written an article about Facebook’s upside that will be published very soon, please sign up to our tech newsletter if you’d like to be notified when it’s out (hopefully later today). My main argument though is that these companies are now able to leverage their power to dominate a long list of industries that are quickly moving online such as software, media, news, entertainment, etc. I’ve argued that some names (notably Netflix) will continue to do well and actually leverage those ecosystems but I’d argue those will be exceptions.
More on the ecosystems to play but I felt like I had to take a look back after looking into the GOOG and AMZN earning details.
Have a great weekend