What about Seohak Ants... US Big Tech Market Cap Decreased by 3,800 Trillion Won This Year

"Due to Market Maturity, Intense Competition, and Interest Rate Hikes"

Nasdaq index graph in the dealing room of Hana Bank headquarters, Jung-gu, Seoul. Photo is not directly related to the article. [Image source=Yonhap News]

[Asia Economy Reporter Jeong Dong-hoon] The market capitalization of the five major US big tech companies has decreased by approximately $3 trillion (about 3,827 trillion KRW) just this year.

On the 26th, the British weekly news magazine The Economist reported that the five major US big tech companies?Apple, Microsoft (MS), Alphabet (Google's parent company), Amazon, and Meta (Facebook's parent company)?have experienced such a decline in market capitalization.

During the same period, the Standard & Poor's (S&P) 500 index, composed of the top 500 US companies, fell by 19.3%, while the Nasdaq Composite Index, which is centered on information technology (IT) companies, plunged by 32.9%. The market capitalization of the five big tech companies also decreased by $3 trillion.

Until last year, the five big tech companies showed a growth rate in sales and profits over the past decade that was five times steeper than the US Gross Domestic Product (GDP). However, this year, rapid interest rate hikes and a global demand decline negatively affected their stock prices. In particular, Meta's stock price plummeted this year, dropping 64.9% compared to the beginning of the year, bringing its market capitalization down to about $300 billion (approximately 383 trillion KRW).

Digital advertising, which is a core revenue source for Alphabet and Meta and also generates significant profits for Amazon, Apple, and MS, has steadily grown even during past recessions when overall advertising market spending declined. Advertisers reduced spending on traditional media such as TV and newspapers but shifted to online advertising.

However, this year, as digital advertising already accounts for two-thirds of the US advertising market and the transition to online advertising has reached its final stage, the digital advertising market has begun to show vulnerability to economic cycles similar to the traditional advertising market in the past. In fact, Meta's revenue decreased in the third quarter following a decline in the second quarter.

Also, just as Google has been the overwhelming number one in the search market and Facebook in the social media industry, market concentration has been natural in the IT industry, but competition has recently intensified again. In fact, Meta is facing management difficulties as Facebook's number of users has declined for the first time due to competitors like China's short video sharing app TikTok.

This content was produced with the assistance of AI translation services.