How global technology giants will ride out stockmarket storm

Walking with giants: which of the global mega-cap stocks that made investors wealthier in recent years will perform best in 2022?

Sinking stockmarkets are expected to be a small detour on the road to riches for the global giants that have supercharged the super funds and share portfolios of millions of Australians.

Mega-cap stocks Apple, Amazon, Microsoft and Tesla have dropped between 13 and 30 per cent in recent weeks, and analysts warn while they could fall further their long-term future remains bright.

Along with Alphabet (Google), Meta (Facebook), billionaire Warren Buffett’s Berkshire Hathaway and semiconductor giant NVIDIA, they give the US eight of the world’s 10 biggest companies.

IG Markets market analyst Kyle Rodda said the dominance of tech giants in recent years reflected their role in the “extraordinary transition in the way economies operate”.

“The tech revolution has changed the way we live – they pervade every element of our lives,” he said.

Facebook rebranded itselft as Meta in late 2021. Picture: Michael Nagle/Bloomberg

“They are effectively monopolies in their market or very close to monopolies.”

The strong growth also reflected a lack of investment opportunities elsewhere, Mr Rodda said, but “even the best companies can be a little overvalued”.

“These sell-offs and the herd mentality provides opportunities for investors to buy the stocks at more attractive levels and take advantage of what are still great long-term growth prospects,” he said.

Mr Rodda said he believed Facebook (now called Meta), Alphabet and Microsoft had the strongest growth prospects this year, because Apple and Amazon could suffer global supply chain problems.

Apple is the world’s biggest company by market capitalisation, valued at $3.7 trillion, followed by Microsoft ($3.2 trillion), Alphabet ($2.4 trillion), Amazon ($2 trillion) and Tesla ($1.2 trillion). Australia’s biggest company, BHP, has a market value of $226 billion.

Most Australians already hold these stocks within their super funds, but can invest directly through stockbrokers and a growing range of online investment platforms.

Marcus Today senior market analyst Chris Conway said their dominant market positions meant “the idea of them having their taps turned off is ridiculous”.

“The cheaper they get, the more inclined I am to buy them,” he said.

“History shows if you are presented with an opportunity to buy high-quality names with dominant market positions, you should be all over it.”

Mr Conway said he preferred Apple and Microsoft shares over Facebook, which was more affected by popularity swings, and he warned the current weakness could continue as markets worried about higher interest rates.

“I expect to see further declines,” he said.

Apple is the most valuable company on the planet. Picture: Mladen Antonov/AFP

ETF Securities head of distribution Kanish Chugh said while there were short-term concerns about the shares this year, the mega-caps’ long-term outlook was strong.

“Amazon shares have dropped 15 per cent in 2022 but their earnings are expected to jump 22 per cent,” he said.

“In the peak of Covid where airlines are struggling and selling aircraft, Amazon is buying aircraft to facilitate its delivery of goods around the world.”

Mr Chugh said the companies were expanding, and “not just sitting in one lane”, with Microsoft buying video games giant Activision and Facebook moving into the Metaverse.

“They’re not standing still,” he said.