CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

How are technology giants maintaining their value?

By Jenal Mehta

10:17, 8 February 2022

Smart city and communication network concept
After their poor start in 2021, positive earnings saved the tech majors – Photo: Shutterstock

The beginning of the year saw a drop in the valuations of the world’s technology majors including Alphabet, Amazon, Apple, Meta and Microsoft.

Most of these technology giants, however, recovered their valuations since then and each took a different approach to get there.

Apple and Amazon altered the prices of their existing products and services, while Microsoft earned a reliable income from its cloud technology, and Alphabet improved its share liquidity. Meta, however, is facing data struggles within the European Union.

Many of these stocks released impressive earnings in face of global supply chain disruptions and labour shortages, which raised market confidence and aided their rise in valuations. Let us take a look at each of them to see how they have managed to remain on the trader’s radar. 

Alphabet is splitting shares

Alphabet’s recent fourth-quarter earnings were one of the most impressive among the technology majors. It reported a 41% on-year increase in its revenues between 2020 and 2021. Much of these profits came from advertising income, which saw a 31% increase during 2021. YouTube advertisements specifically earned the company 26% more during the year.

Revenue from Google Cloud also saw a substantial increase, where revenue from this business grew almost 45% during 2021.

The same announcement was accompanied by the declaration that the board of directors had approved a 20-for-1 stock split for all three class A, B, and C stocks. This would take place on 1 July 2022 at the close of business. Following this announcement, Alphabet’s share price moved higher by 26%.

An outlook published by financial services firm Charles Schwab noted: “[the stock split] could help improve liquidity and potentially drive GOOG.L’s inclusion into the price-weighted Dow 30”.

What is your sentiment on GOOG?

Vote to see Traders sentiment!

Amazon increases subscription price

Amazon’s fourth-quarter 2021 earnings release saw both positive and negative information. Although the company’s net sales increased 9% from the same quarter in 2020, its free cash flow decreased to an outflow of $9.1bn in 2021, from a positive inflow of $31bn in 2020 with most of this cash outflow coming from its operating costs.

Its operating income was also down 50% year on year. On the date of the earnings announcement, the share price fell almost 8%.

The effects of the recent supply chain problems and labour shortages have clearly affected the income generated through its operations. The slowdown in online retail sales has also affected the company, with its net sales from online stores down 1% on-year.

Amazon’s earnings release made it clear that it was heavily focused on improving its customer’s ‘prime’ experience. They also planned to team up with Venmo, Starbucks and Sainsbury’s to enhance the customer experience.

The firm recently announced that the price of ‘prime’ would increase from $12.99 per month to $14.99, while the annual subscription would increase from $119 to $139. Following this news, its share price enjoyed its highest daily increase since 2015. Much of the valuation loss seen following the earnings release had now been recouped.

Apple is potentially going low cost

At the end of January, Apple released its most recent quarterly earnings results. It managed to increase its revenue from product sales by almost 10% in 2021, while growth in revenue from services was much more impressive at 26% year over year.

CEO Tim Cook said in a public statement: “This quarter’s record results were made possible by our most innovative line-up of products and services ever”.

Apple’s share price jumped 6% after the earnings release. The price, however, remains below its peak seen at the start of January when the device giant briefly reached a $3tn valuation.


238.37 Price
+1.830% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.10


15.24 Price
+5.360% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.13


468.27 Price
+0.450% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.14


147.16 Price
+0.860% 1D Chg, %
Long position overnight fee -0.0262%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 0.13

Markets now await Apple’s upcoming product launch event on 8 March 2022.  There are expectations of the company releasing information on many new products. With potential news on a low-cost version of their current devices, which may allow their devices to be more accessible to a larger consumer base.

Meta is struggling

Much like many other technology firms, inflation and supply chain disruption affected Meta’s bottom line, whereby its most recent earnings suffered. Meta saw this specifically affect its advertising revenues.

CFO David Wehner commented in the earnings release: “We’re hearing from advertisers that macroeconomic challenges like cost inflation and supply chain disruptions are impacting advertiser budgets.”

Earnings showed that although revenues increased by almost 18% between 2020 and 2021, Meta’s cost of revenue increased by 40%, resulting in a reduction of its net income.

Facebook’s daily active users fell by one million during 2021. Although not a staggering number as the site still holds 1,929 million daily active users, this was the first time that growth in the number of users was negative.

Following this and its earnings release on 2 February, the stock price fell almost 27% overnight and has not recovered fully since. 

Meta is struggling with European regulators on the issue of transatlantic transfer of data. The company has warned that if it was unable to transfer data across, it might have to cease operations within the region.

Meta stated in its most recent 10-k filingIf a new transatlantic data transfer framework is not adopted and we are unable to continue to rely on Standard Contractual Clauses or rely upon other alternative means of data transfers from Europe to the United States, we will likely be unable to offer a number of our most significant products and services, including Facebook and Instagram, in Europe, which would materially and adversely affect our business, financial condition, and results of operations.”

Microsoft relies on ‘cloud’ as it turns to gaming

On 18 January 2022, Microsoft announced its plan to acquire the video game holding company, Activision Blizzard. The deal, aimed to build Microsoft’s gaming business across mobiles, personal computers, consoles and the cloud, was gaming’s biggest takeover to date, costing Microsoft $75bn.

Following this, the company’s shares dropped 2% and inched lower until Microsoft released its second-quarter earnings. In the earnings release, Microsoft saw its total revenue grow by 20% on-year, with much of the growth coming from cloud services.

The company’s biggest growth was seen in its dynamic products and cloud services, which saw a 29% increase in revenue, while server products, which support the cloud, saw a 26% growth in revenue.

CFO Satya Nadella said in the earnings call that “it was a record quarter, driven by the continued strength of the Microsoft Cloud, which surpassed $22bn in revenue”. Xbox revenues were up 10%, and revenue from gaming as a whole had increased by 8%.

In the same earnings call, Nadella added “our planned acquisition of Activision Blizzard, announced last week, we are investing to make it easier for people to play great games wherever, whenever, and however they want and also shape what comes next for gaming as platforms like the metaverse develop”.

Following this, Microsoft shares regained an upward momentum.  

Markets in this article

Alphabet Inc - A (Extended Hours)
132.16 USD
-0.71 -0.540%
AMZN Inc (Extended Hours)
147.16 USD
1.26 +0.860%
Apple Inc (Extended Hours)
191.24 USD
1.34 +0.710%
Meta Platforms Inc (Extended Hours)
325.04 USD
-1.53 -0.470%
Microsoft Corp (Extended Hours)
375.52 USD
-3.82 -1.010%

Rate this article

Related reading

The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 570.000+ traders worldwide that chose to trade with

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading