😎 Three Big Tech triumphs

What’s going on here?

Apple, Meta, and Amazon released results late on Thursday, proving once and for all that good things come in threes.

What does this mean?

Meta set the trio’s tone with advertising revenue that picked up by 24% from the same time last year, keeping pace with last quarter. The announcement that really sent investors toward Meta’s stock, though, was news of the company’s first-ever dividend. Amazon, for its part, managed to beat most of its expectations. That said, its famed cloud division only just hit targets: AWS made 13% more revenue last quarter than the same time the year before, falling shy of Microsoft’s rate. Apple had issues too, reporting that sales in China fell 13%. Still, with iPhones flying off the conveyor belts, Apple managed to make more revenue and profit than analysts expected.

Why should I care?

For markets: The end is nigh… maybe.

Many a prophet has advised that all good things must eventually come to an end, from Geoffrey Chaucer to Nelly Furtado. That’s a worrying prospect for Big Tech investors, though, after the Magnificent Seven stocks carried US markets on their backs last year. Microsoft offered some reassurance on Tuesday, boasting a cloud business that made 30% more revenue last quarter than the same time last year. And with any luck, Nvidia will dole out more comforting news on February 21st.

The bigger picture: Big Tech gets tired, too.

Big Tech’s results have been fine, so far, but any Friends fans will know that you can’t trust “fine”. In fairness, though, investors’ expectations could hardly have been higher after last year’s AI furor, so the seven biggest tech companies landing somewhere around that mark is no small feat. Still, Big Tech stocks could enter a “consolidation” phase where prices stay within a tight range for some time, often referred to as moving “sideways” rather than higher or lower.

What’s going on here?

Walmart announced a three-for-one stock split this week, making it a lot cheaper for employees to pledge allegiance to corporate America.

What does this mean?

Walmart promises everyday Americans affordable groceries, clothes, and even home decor, proudly promoting the slogan, “Save Money Live Better.” The US retail giant’s stock was at odds with that mission, though, sitting around $165 per share. And because that meant many devoted employees and staunch Walmart supporters couldn’t afford more than a couple of shares, the retailer split its stock into three. So now, employees who already commit their working week to Walmart can sacrifice a chunk of their paychecks to pick up a whole stock for a third for the old price.

Why should I care?

The bigger picture: It’s all human psychology.

Companies consider splits when their stock becomes too successful, commanding a price tag so high that it puts retail investors off. By splitting the stock, the firm creates the illusion that the shares are better value – even though it would take three new $50 shares to match the ownership of a single old $150 one. Stock splits, then, don’t affect a company’s value by themselves: whether or not investors send the stock higher depends, as always, on profit alone. Tesla, for example, split shares three-for-one in August 2022, and the EV maker’s share price has only fallen some 60% since then.

For markets: More, more, more.

The 26 biggest US firms all have triple-digit stock prices, with Nvidia’s hanging all the way above the $600 mark. Now, some brokers do let retail investors buy fractions of a share, but not all of them. Plus, the ones that do can have off-putting limitations, like not being able to trade during the day and only knowing your price after the market’s closed. So watch this space: Walmart probably won’t be the only one to coax in retail investors by splitting its stock in the coming months.