Despite strong headwinds, from a trade war to regulatory scrutiny, Apple, Microsoft, Alphabet, and Facebook have seen their stocks soar in 2019
Giant tech stocks have posted a remarkable year, shrugging off the trade war, bipartisan political hostility and regulatory threats. Tweets: @stevelohr and @nytimes Tweets: Steve Lohr / @stevelohr : A good point by @MatthewPhillips. And, of course, we've seen this pattern before. Microsoft shares soared to a peak in December 1999, in the midst of its antitrust trial. Yes, monopoly rents are lucrative. https://www.nytimes.com/... @nytimes : Even as Big Tech comes under scrutiny in Washington and elsewhere, their investors don't seem to mind: The giants of tech — companies like Apple, Alphabet, Amazon, Facebook and Microsoft — are the stocks that have made the market's year. https://www.nytimes.com/...
Context & Ripple Effects
This piece captures the moment the market stopped treating political risk as a risk factor for Big Tech. A year earlier, earnings from Apple, Amazon, Google, Facebook and Microsoft already showed the businesses shrugging off the forces arrayed against them; by late 2019, the trade war and bipartisan hostility in Washington had failed to translate into any valuation penalty.
What makes it worth revisiting is how durable the pattern proved. The same five companies went on to reach roughly 18% of the S&P 500 by market value, and in 2020 their stocks rose 37% while every other S&P 500 stock fell — a divergence that repeated in 2023 when Microsoft, Alphabet, Amazon, Meta, Tesla, Apple and Nvidia gained a median 43% on AI optimism. The Lohr tweet's analogy lands: Microsoft peaked in December 1999 mid-antitrust-trial, because monopoly rents are lucrative.
First-order effects
- Investors holding Apple, Microsoft, Alphabet and Facebook were rewarded in 2019 for ignoring regulatory and trade-war headlines — the market priced none of the political hostility into these names.
- Index-fund holders absorbed growing single-sector concentration risk whether they chose it or not, as the giants' outperformance mechanically raised their weight in the S&P 500.
Second-order effects
- Capital flows reinforced the winners: as the five companies' index weight climbed toward 18%, passive buying channeled more money into precisely the stocks regulators were scrutinizing, insulating them further from the political discount.
- Competitors and challengers faced a widening valuation gap — with the giants trading at premiums justified by earnings durability, rivals without comparable margins had a harder case for capital.
Third-order effects
- If the pattern holds, antitrust and regulatory action against Big Tech becomes a lagging constraint: enforcement timelines run slower than earnings compounding, as Microsoft's 1999 peak-during-trial episode foreshadowed, so market structure consolidates before policy can reshape it.
- A systemic consequence is that US equity performance increasingly depends on a handful of mega-cap tech balance sheets — raising the stakes of any eventual regulation that actually bites.
The trend: Across cycles from 2018 through 2023, political and regulatory hostility has repeatedly failed to price into mega-cap tech valuations, concentrating both market power and index dependence.