Big Tech's Shifts: Google, Nvidia, Amazon

With major macroeconomic events ranging from the approaching U.S. presidential elections to geopolitical tensions in the Middle East and Ukraine, there doesn’t seem to be a dull moment that goes by on global stock exchanges. Joining the party, major tech firms are undergoing shifts in their market positions. Let’s take a closer look at the latest news from Alphabet, Nvidia, and Amazon:

Google to Lose Top Search Spot?

Alphabet's (GOOG) daughter company Google is facing a critical moment in its antitrust battle with the U.S. Department of Justice (DOJ). It was ruled that the firm is liable for having operated as an illegal monopoly when it comes to the internet search market sector, and now the markets and Alphabet's executive suite alike are waiting to hear the DOJ's proposed remedies to break its dominant market position. These legal suggestions could range from breaking up Google itself, to more specific measures like making its search engine data available to competitors, or halting agreements that ensure Google remains the default search engine on mobile devices and browsers.

The final decision will rest with Judge Amit Mehta, who sided with the DOJ's monopoly claims. The next phase of the trial, focusing on remedies, is expected to begin in 2025. Judge Mehta has considerable discretion in determining the extent of the changes Google must make, potentially requiring the company to divest major components such as its Android operating system, Chrome browser, or AdWords platform.

However, Google has promised to appeal the ruling, which could delay any actions until higher courts decide the outcome. Even if changes are enforced, Judge Mehta retains the ability to modify them as needed to promote fair competition. As legal experts debate whether a breakup is likely, others predict more targeted interventions, such as eliminating Google's default placement agreements on devices, which could significantly alter the tech landscape. As of the time of writing, it is not yet clear how traders are likely to react to any of the above scenarios. While Alphabet shares have risen 16% so far in 2024, they notched a 2.5% drop in value on Monday, 7 October, leaving this crucial question open. 

Nvidia Keeps Rising

Nvidia (NVDA) shares have been on a long-term uptrend over the past several years, with their value in 2024 having grown by more than 150% thus far in 2024 as of the time of writing. 7 October’s big news about the firm may provide further impetus for traders to keep Nvidia shares reaching skyward.

On Monday, Nvidia's market capitalisation surpassed Microsoft's, making it the second-largest company globally, just behind Apple (AAPL). This milestone was driven by strong demand for Nvidia's products, particularly those supporting artificial intelligence (AI) technology. Nvidia's market value is now estimated at $3.13 trillion, overtaking Microsoft's $3.04 trillion.

Nvidia's success has been closely tied to the increasing need for AI-related hardware, with its partner Super Micro Computer (SMCI) reporting high shipments of GPUs (Graphics Processing Units), further boosting both companies' shares. Analysts believe Nvidia's stock could continue to rise due to robust AI spending and favourable seasonal trends.

Nvidia's market capitalisation has fluctuated alongside those of Microsoft (MSFT) and Apple in recent months. However, the company's dominance in AI chip production has been a strong growth factor this year, with further growth expected in the fourth quarter. However, while to some it may seen like no obstacles lie in front of Nvidia on its way to the top, global markets are often good for a surprise, so the firm's market position shouldn't be taken as a foregone conclusion.

Amazon’s Shine Dulls

On the less positive side of the big tech balance sheet, Amazon (AMZN) saw an over 3% drop in its share price on Monday 7 October. The proximate cause for this shift may likely have been the fact that Wells Fargo (WFC) analysts downgraded the company's rating, citing concerns that its success in cloud services may not be enough to counter other profit margin pressures. Analyst Ken Gawrelski reduced Amazon’s rating from Overweight to Equal Weight, lowering the stock’s price target from $225 to $183. He noted that Amazon faces increasing competition from Walmart, slower growth in its ad business, and high costs from its Project Kuiper satellite broadband initiative.

Despite these challenges, Amazon Web Services (AWS), its cloud division, remains a bright spot, generating $26.3 billion in revenue during the second fiscal quarter. AWS, which includes Amazon's AI services, has helped offset weaker retail growth, and analysts still expect Amazon to perform well in the third quarter. Going forward, competition with other players in the sector could turn out to be a drag on growth, but traders will have to wait and see how it all plays out for Amazon.

Conclusion

As global markets remain dynamic, the tech giants—Alphabet, Nvidia, and Amazon—are navigating significant transitions. From antitrust battles to AI-driven growth and rising competition, these companies face unique challenges and opportunities, making their future moves critical for market-watchers going forward.