Big Tech’s Surging Growth ⇥ nytimes.com

Shira Ovide, New York Times:

The U.S. economy is cranking back from 2020, when it contracted for the first time since the financial crisis. But for the tech giants, the pandemic hit was barely a blip. It’s a fantastic time to be a titan of U.S. technology — as long as you ignore the screaming politicians, the daily headlines about killing free speech or dodging taxes, the gripes from competitors and workers, and the too-many-to-count legal investigations and lawsuits.

America’s technology superpowers aren’t making bonkers dollars in spite of the deadly coronavirus and its ripple effects through the global economy. They have grown even stronger because of the pandemic. It’s both logical and slightly nuts.

Richard Waters, Financial Times:

Big Tech’s increasingly outsized impact on the world of business can best be summed up by just two numbers.

One is the combined revenue of Alphabet, Amazon, Apple, Facebook and Microsoft, which jumped 41 per cent in the first three months of this year, to $322bn. That points to a rapid acceleration in growth that the leading tech companies have not seen in years, even as they have become some of the world’s biggest companies.

The other is the companies’ profit growth, which has been even more spectacular. After-tax earnings for the five soared by 105 per cent from the previous year, to $75bn. Profit margins rose strongly across the sector, as the biggest companies benefited from the economics of scale while keeping a wary eye on cost expansion during the pandemic.

Waters has a set of charts showing the revenue change at each of those five companies. Aside from the wild growth at four of those companies, the most striking thing to me is the consistency of Microsoft’s revenue. It has grown somewhere between ten and twenty percent per quarter since some time in 2018 — including during the pandemic when every other large tech company was making bank. I assume that is because a bunch of people sold their old computers with Facebook ads, then bought shiny new iPads to use with their company’s existing Office 365 subscription.

By the way, if you think Apple’s margins are grotesque, hold your breath when you see Facebook’s and Microsoft’s. Sure paints a completely different picture of the economy than many people are experiencing.