Led by tech giants, the U.S. stock index has further expanded, and after surging 54% last year, the Nasdaq 100 index has risen another 86%。
Tony Pasquariello, head of Goldman Sachs' hedging business, used a chart to show the "jaw-dropping" market since the beginning of the year, and a few ** "carnivals" continued, with the top 5 in the US ** contributing 70% of the increase. UBS bluntly said that the "tech giants" will continue to benefit from a clear profit path and may continue to lead in 2024.
According to the data compiled by **, in the fourth quarter ended December 30 last year, the five major tech giants, Microsoft, Apple, Google, Amazon and Meta, had record cash reserves totaling nearly $140 billion. * The analysis statesIt can be seen from the cash in the hands of the technology giants that these companies still have hundreds of billions of benefits that have not been released, and the rally may continue.
Because these companies already have strong balance sheets and high net cash positions, investors can judge that these companies will have more cash to reward shareholders in the future, and a focus on capital returns will help increase shareholder value in the future, which is better than holding too much cash on the balance sheet, said Angelo Zino, a researcher at CFRA Research.
* The analysis points out that given the size of these technology companies, it is becoming more and more difficult to spend the money now, one of which isIt's not easy to find investments that can continue to drive growthSecond, because these companies are becoming the focus of regulators, technology companies have to consider the attitude of regulators when considering acquisitions, which actually adds additional costs.
As a result, tech giants have opted for another way to spend money – buybacks
Apple: Repurchased $20.5 billion in the fourth quarter, remaining $53.6 billion from $90 billion of previous mandates, and had $173 billion in cash and cash equivalents.The analysis pointed out that buybacks reduce the total number of companies outstanding, and earnings per share will rise while profits remain unchanged, thus helping to boost the company's share price. Executives often use buybacks to show that they believe their companies are being undervalued.Google's parent company, Alphabet: repurchased $16.1 billion in the fourth quarter, remaining $36.3 billion from a $70 billion previous mandate, holding $111 billion in cash and valuable**.
Meta: Repurchased $6.3 billion in the fourth quarter, leaving $30.9 billion of the $40 billion previous mandate (and announced an additional $50 billion** repurchase authorization), with $65.4 billion in cash and valuable**.
Microsoft: $4 billion repurchased in the fourth quarter, $15.9 billion remaining in $60 billion of previous mandates, and $81 billion in cash and cash equivalents.
Historically, buybacks have been more common in established companies, which focus on returning cash to shareholders, compared to start-up companies, which tend to use cash for expansion, investment in new facilities and equipment, research and development of new products, or acquisitions.
Warren Buffett, the head of Berkshire, is a big fan of buybacks. In his view, buybacks have many benefits: they are good for shareholders and sellers, safer than takeovers, more effective than paying dividends, and a way for executives to show that they care about shareholder returns.
In the quarterly report of the tech giant, there is another detail worth noting, that is, to reward shareholders with dividends, for growth stocks, dividends have not been an effective way to boost stock prices, many investors believeWhen growth stocks start paying dividends, that's when they reach the end of their growth。But the market's reaction after Meta's dividend last week seems to indicate a change in attitude towards dividends.
The founder of asset management company Deepwater said that if you look back at the past 10 years, when technology companies began to pay dividends, growth began to stop, but Meta announced dividends at the same time, and said that he would continue to invest. It's telling shareholders that they can do the growth in AI and the metaverse on their own. Investment bank Baird also said,In the era of generative AI, dividends are no longer a sign of slowing growth.
According to data from S&P Global, the four major U.S. technology companies have collectively invested more than $1 trillion in buybacks over the past decade.
In the 10 years ending March 31 last year,The four major U.S. tech giants Apple, Alphabet, Microsoft and Meta invested a total of 1$1 trillion for buybacks
Apple's buyback is the largest among U.S.-listed companies, with an investment of $621 billion. Alphabet came in second with $193 billion in buybacks. Microsoft and Meta have buybacks of $180 billion and $130 billion, respectively.
Over the past 10 years, the top 20 buybacks have invested about $2 trillion in total, accounting for 6.6 percent of S&P 500 companies over the same periodAbout one-third of the $6 trillion total buyback.
For comparison, the S&P 500 rose about 150% in the 10 years to March 31.
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