A day after Congressional grilling, big tech stocks add $250 billion

What was poised to be a bruising week for Big Tech has instead turned into a major windfall.

The biggest names in Silicon Valley reported shockingly strong profits late Thursday, one day after their bosses were subjected to intense grilling on Capitol Hill from lawmakers concerned that their power and influence has grown too large. Amazon, Apple and Facebook all saw their shares rise Friday morning, adding a combined $250 billion in market capitalization.

Facebook shares were up more than 7.5 percent in early trades after it reported revenue growth of 11 percent in the quarter, showing that a high-profile advertiser boycott that has included Nike, Starbucks and Unilever wasn’t hurting its bottom line. The social network benefitted from increased user growth as the pandemic has kept people from interacting in person.

Apple maintained its strong sales numbers despite needing to close more than 70 of its stores during the quarter, sending its shares up 5 percent. Results from is App Store — which came under fire this week over the stiff fees it charges smaller app makers — were especially robust.

Amazon’s market cap, meanwhile, was up to $1.6 trillion Friday morning after the e-tailing giant left Wall Street’s quarterly expectations in the dust, surpassing earnings per share forecasts by more than $8 as its dominance over online retailing continued to expand.

The earnings served as further evidence that the companies’ automated, algorithmically optimized businesses are not only weathering the coronavirus pandemic but are thriving in it. Meanwhile, Old Economy industries like retailing and car-making falter, pushing scores of companies into insolvency and costing millions of Americans their jobs.

“I will tell you this, it’s good that these tech giants did their hearings yesterday and not tomorrow given all these results,” Wedbush analyst Dan Ives told Bloomberg Television.

Google parent company Alphabet was the lone outlier from Wednesday’s Congressional hearing to have a poor showing, reporting its first-ever decline in advertising revenue. Shares of the search juggernaut were down 4.3 percent in early trading, despite reporting a $6.4 billion profit.

The results arrived after a Wednesday hearing before the House Judiciary Committee where the CEOs of all four firms insisted that they do not need to be reined in, arguing that they all face a high level of competition in their respective sectors.

The tech bosses at times faced withering criticism from lawmakers who said they were abusing monopoly-like powers to expand their bottom lines. Bezos was grilled on his company’s treatment of small merchants who use Amazon’s online marketplace, while Google’s Sundar Pichai faced questions about whether the search giant exploited its dominant position in advertising.

“These companies as they exist today have monopoly power,” said Representative David Cicilline of Rhode Island, who is leading a yearlong House investigation into the companies. “Some need to be broken up, all need to be heavily regulated.”

Bezos and Zuckerberg — the No. 1 and No. 4 richest people on earth, respectively — testified that they are in a constant battle with the likes of Walmart and TikTok, respectively. Still, Friday’s gains could see them add more than a combined $10 billion to their net worths.

With the Associated Press