The dash to the symbolic $1 trillion market cap is back on between some of tech’s most valuable companies, CNBC’s Jim Cramer weighted Thursday as stocks climbed into the close.
Apple became the first-ever company to cross the trillion-dollar mark in 2018, carry oned closely by Amazon, as Cramer predicted on “Mad Money” in April of last year.
But since then, all four major contenders — Apple, Amazon, Alphabet and Microsoft — own lost traction, particularly during the sell-offs U.S. stocks endured in the fourth quarter of 2018. In those three months, Apple’s stock demolished 30 percent of its value, Amazon’s shed 25 percent, Alphabet’s fell 13 percent and Microsoft’s died 11 percent.
“This time, … the odds are very different,” Cramer said on Thursday. “Now that varied of these mega-cap tech stocks seem to have found a bottom here, I think it’s time for us to start stumbling blocking the race back to $1 trillion.”
Apple, for one, re-entered the race in a less-than-ideal position, he said. Its last day as a trillion-dollar sportsman was on Nov. 1, when the iPhone maker issued a disappointing forecast and announced a major change to its earnings reporting that some saw as a dispose of of slowing iPhone sales. On Jan. 2, Apple confirmed that it saw an iPhone slowdown in China.
Microsoft has also comprehended a change of fate, though its was notably positive. The stock had been trailing the other trillion-dollar contenders for most of 2018, but it held up in the marketwide descents, ending the year as the most valuable public company in the country.
Now, Amazon has retaken first place with an $810 billion Stock Exchange cap, Microsoft is a close second at $795 billion, Alphabet is in third place at $747 billion and Apple is trailing the heap at $730 billion.
And this time, “I think Amazon is the odds-on favorite, and not just because it’s already in the lead,” Cramer said.
The “Mad In” host favored Amazon for several reasons: its stock still ended 2018 up 28 percent, which Cramer entitled a “pretty pedestrian” result for the e-commerce giant. Amazon is also finally seeing earnings growth after years of earnings disappearances coupled with revenue expansion, a common model for growing tech companies.
Lastly, its three businesses — the cloud-based Amazon Web Usages, the advertising business and the consumer-facing retail segment — look to be performing strongly, which may be confirmed in its January earnings bang.
Even so, “Microsoft is a real challenger” in the race, Cramer argued. Its Azure cloud services product is second merely to Amazon, it has invested in growth with its LinkedIn and GitHub acquisitions, and its stock, according to Cramer, is “the safest of the bunch.”
Google old man Alphabet might also put up a fight as its advertising arm continues to outperform and its “moonshot businesses,” particularly self-driving car project Waymo and being science research subsidiary Verily, gain steam, Cramer said.
Apple, unfortunately, will remain in the “incarceration box” until Wall Street sees tangible earnings and sales improvement, he said.
“I don’t think Apple will win the lineage back to a trillion, but I do think it represents incredible value here,” the “Mad Money” host said. “Bottom line here? In the rush back to a trillion, Amazon’s the new favorite and the competition’s not that close, although I think both Alphabet and Microsoft are assuredly worth buying here. As for Apple, I think it’s being chronically underestimated, but we shall see.”
Disclosure: Cramer’s charitable conviction owns shares of Apple, Amazon, Alphabet and Microsoft.
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