Markets flag major global transformation as Alphabet, Amazon and Apple shares soar

Apple TV’s tie up with Amazon TV threatens global TV networks. Pic: AP

All too often in the stock market the trees overshadow the wood. In this case the trees are the day-to-day events. The wood in 2017 is the biggest market play in the world’s history.

And so last night we saw Alphabet (parent of Google) shares top $US1000.

It wasn’t a big deal because Amazon had achieved the same milestone a short time ago.

Both companies have resisted the temptation to split their stock and both shares have risen by more than 33 per cent over the last year. But that’s just the trees.

Also last night, Apple announced that its TV operation would in the future include Amazon TV. More trees.

Apple has a market capitalisation of $US814 billion and Amazon $US488 billion. The two enormous companies have been rivals but now they see the potential of coming together.

And suddenly the trees no longer obscure the wood. We are watching before our eyes the most massive transformation of world commerce. And like all such changes the share market moves first.

The stock market senses the wood and has sent shares in the leaders of the world commerce transformation — Alphabet (Google), Amazon, Facebook and Apple all up by more than 30 per cent.

And that rise took their combined market capitalisations above $2400 billion. It’s the biggest increase in the total capitalisations of four stocks in our history.

What the market is predicting is that these four companies are going to transform conventional business and leave a lot of struggling companies in their wake. And we have not included Microsoft, which will be also be a player.

The combination of Amazon and Apple TV threatens global TV networks. Facebook and Google gave already ravaged media revenues.

Apple last night announced an extension of its Apple cash. Banks around the world should be just as nervous as the TV and media companies. And in Australia our four largest companies are banks. They will need to be right on their mettle to match the competition that is coming to them. They are fully aware of the threat.

Amazon is the world’s largest retailer and it is going to take a big slice of the Australian market when it gets serious here.

Motor companies like Ford know that their rivals in the future will include Google and Apple with their driverless cars. Toyota this week sold out of battery developer Tesla because they see Tesla as a rival. Tesla is a minnow with a market capitalisation less than 10 per cent of Alphabet. But Tesla is bigger than Ford.

Ford and General Motors have a combined market capitalisation of under $US100 billion----they are small when compared to Google and Apple.

We have seen in the past that massive organisations do not have the flexibility to seek out new markets and keep up with developments.

That may be the case with the current crop of American giants. But don’t bet on it. What sets groups like Apple, Alphabet, Facebook and Amazon apart are their massive access to data. While at their base they have high technology their real power comes from their vast customer lists and what they know about those customers.

They are going to be led into many more industries by this data.

And that knowledge enables them to use their technologies to devise products and services that initially target gaps in the market that the incumbents have missed.

And as always happens in the boom there are a vast number of small companies that are pursuing technology in a specialised area. What makes the majors so powerful is that where small groups achieve a breakthrough they often sell to the majors because the majors have the data and customer base to use the new development.

As the power of the chip increases each year and we move into quantum computing, the acceleration of new developments will increase.

And the stock market is conveying this message loud and clear.