Alphabet & Amazon Earn Big Despite Market Volatility

By Geoffrey Thomulka,
Money and Investing Writer

It is not a secret that the U.S. stock market has been volatile this year.

The erratic movements are caused by overseas pressures and nonrealistic earnings expectations.

However, one sector has proven to be center for steady growth and high earnings.

The tech sector has seen high earnings, mostly driven by two giants, Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOG).

Amazon.com has been a household name for the past decade.

With their friendly customer service, wide array of products, and expedited shipping, they have become the average shopper’s go-to ecommerce site for all of their needs.

In the past few years, Amazon has continued to lead its kind as a retailer, but has expanded into different markets.

To compete with their competition, Amazon has provided an online TV and movie streaming services, cutting edge hardware, and an e-book emporium.

Reasons why the earnings are up are mostly due to an increase in Amazon’s Prime memberships.

Becoming an Amazon Prime member entitles you to receive free two day shipping on all qualifying items and allowing you access to Amazon Instant Video which is their online streaming service.

Reports showed that prime membership among amazon customers increased over 40 percent last quarter.

Over 90 percent of online shoppers surveyed said they used amazon as their primary online market place.

This number is up quite a bit since the last time the survey was taken.

Another NASDAQ big earner was the newly incorporated Alphabet.

Alphabet is not as much of a household name as the company that was absorbed into it, Google.

The executives at Google, earlier in 2015, built a parent company above Google to house all of the special project Google partook in.

Since Google itself was a search engine, the executives thought it would be best if the company that was meant to be a search engine didn’t spend money on R&D of autonomous cars and the like.

The restructuring of Google has been met with great applause as Alphabet’s stock price has been on the rise since.

One of the main reasons for the earnings increasing is the company’s cash position.

There is an old saying that says “cash is king.”

If you ask Alphabet, they will agree with you. This past quarter, Alphabet’s free cash grew to $72.7 billion, which is about a 13 percent increase from the beginning of the year.

With that cash, Alphabet plans to buy back shares of its stock.

They do not pay a dividend, so this is a way for them to return some of the value of the company to its shareholders.

Year to date, the stock market in the United States has been shaky, at best.

But among this volatility, Alphabet and Amazon have remained a float, realizing earnings higher than expected.

Between Alphabet, Amazon and Microsoft (NASDAQ: MSFT), these tech giants maintain over 21 percent of the NASDAQ 100.

High earnings and growth potential among these stocks will hopefully be able to steer a market that is looking for an identity of constant and consistent growth.

A version of this article appeared in the Tuesday, November 3rd print edition.

Contact Geoffrey at
geoffrey.thomulka@student.shu.edu

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