- Apple and Microsoft’s trillion-dollar market capitalizations value them higher than the entire German stock market.
- Renewed fears of a ‘tech bubble’ are growing among Wall Street analysts.
- But APPL and MSFT remain modestly valued and growing rapidly, while the comparison to Germany’s stock market is inherently flawed.
Tech stocks are in a massive bubble, if you listen to many of the talking heads on Wall Street. And it’s easy to see how they came to this conclusion. Just look at the trillion-dollar valuations of Microsoft and Apple alone.
Welt’s Holger Zschaeapitz accurately pointed out that the combined market capitalization of Apple (APPL) and Microsoft (MSFT) alone is now larger than the entire German stock market.
“The market value of all listed German companies, at $2.18tn, is smaller than that of the 2 largest US corporations. Apple and Microsoft have a combined market capitalization of $2.233tn.”
At first glance, this seems like sure evidence of a bubble. Germany is no small fish; it’s the largest economy in Europe. How can two companies be worth more than the entire German stock market?
Of course, the story here is much more complicated than a simple chart…
Dot-com round two?
Rob Arnott, partner and CEO at Research Affiliates certainly lives in the “bubble” camp. Last month he said ‘FANMAG’ – an acronym referring to Facebook, Amazon, Netflix, Microsoft, Apple and Google – was wildly overvalued.
“Will these stocks produce such impressive growth that they will justify their current market cap, or are these implausible growth expectations? We do not have a crystal ball, of course, but we would recommend not betting on the momentum continuing.”