Jeff Bezos. Credit: Alex Wong / Getty
![](https://unherd.com/wp-content/uploads/2019/09/Peter-F-100x100.jpg)
One thing UnHerd cannot be accused of is underplaying the power of big tech over the economy, culture and just about everything. Quite right too – the rise of the tech giants is one of the most important stories of our time. And yet there’s an important counter-narrative, which is that these companies are exhausting their potential.
It’s a case examined by Derek Thompson in a thought-provoking piece for the Atlantic:
“…[in] a widely circulated eulogy prepared by Vincent Deluard, a strategist at INTL FCStone, a financial-services company, [wrote that] “If technology is everywhere, the tech sector no longer exists… If the tech sector no longer exists, its premium is no longer justified.” When the Financial Times got its hands on the document, it leaned into the death thesis, declaring: “The tech sector is over.””
Some big attention-grabbing claims there – but what do they actually mean?
Thompson is quick to explain that “over” does not mean dead, which is just as well, as the tech sector is still very much in existence. The tech giants are among the biggest companies on the planet and they’re still making lots of money. Only last week, Facebook reported record profits.
However, if you believe that stock markets accurately ‘price-in’ the future, then, as Thompson puts it, the boom years do appear to be over:
“Publicly traded companies that are classified as “tech” now trade at one of the smallest premiums in history, according to a recent JP Morgan analyst note. The most famous of these companies—the so-called FAANGs, of Facebook, Apple, Amazon, Netflix, and Google—have seen their price-earnings ratios collapse by more than 60 percent in the past two years.”
Last year was a tipping point: in 2018 Apple and Amazon became trillion dollar companies (on the basis of their market capitalisation) – and then lost this enviable status as share prices sunk back down again. This isn’t just about the de-hyping of tech stocks – there is some hard data behind the dampening of expectations. For instance, the fall in iPhone sales – and of smartphone shipments generally.
Each of the tech giants owes its rise to mastery of a particular field: for Google it was search; Amazon, online retail; Facebook, social media; and Apple (in its current incarnation), the high-end smartphone.
They’ve got other irons in the fire, of course, but there’s no doubt about the importance of their flagship products.
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
Subscribe