Question

Why are the technology growth companies such as Apple, Google, T-Mobile, and A&T considered diversified stocks? Explain how they work in the financial sector. Add some references.

Answer 1

Tech stocks Apple, Google, T-Mobile, and A&T generally are considered to be very diversified stocks and, as such, carry many of the characteristics of growth stocks:

Rapidly Rising Earnings— These companies stocks earnings are expected to rise faster than inflation and the overall economy. Since stock prices usually track earnings, these companies should provide long-term growth of capital. True growth companies should see increased earnings, even during economic slowdowns, because demand for their products and services is expected to grow steadily, insulating them from economic highs and lows.

High Price/Earnings (P/E)—Normally stock have higher P/E valuations than stocks in general, as represented by the Standard & Poor’s 500 Stock Index. (P/E, which measures how much investors are willing to pay for every dollar a company earns, is found by dividing the company’s stock price by its most recent or projected 12-month earnings per share.) Investors are willing to pay more for rapidly growing companies because they expect the steadily rising earnings to translate into higher stock prices.

Volatility—Stocks of these companies with high P/Es and low dividends tend to be extremely volatile. Since investors pay relatively high prices on the expectation that growth stocks will rapidly increase their earnings, these companies are often punished when they miss their targets, and they lack the dividend yield that can cushion stock prices when the market drops. But they can be handsomely rewarded by investors when they meet or exceed earnings targets.

Obsolescence—Since IT companies typically are concentrated in a rapidly changing field, Tech Cos products or services may become obsolete quickly or may not be marketed successfully. The bright prospects for technology can lead to periods of investor euphoria for these stocks, driving their P/Es and other valuation measures higher than growth stocks in general and subjecting their share prices to potentially larger declines if investors become dismayed with their performance. Historically, portfolios of tech stocks have been more volatile than broadly diversified portfolios, creating a bumpy ride for investors.

Diversification of these companies are also: AT&T (T), T-Mobile (TMUS), Verizon Communications (VZ) and Sprint (S) could get revenue boost from a new cellular version of the Apple Watch.

Work in the financial sector:

AT&T is into digital tranformation services to financial businesses like banks and are are streamlining operations while adding new digital components that improve performance and customer experience. A recent IDG-AT&T survey found that both business and IT leaders in the banking industry overwhelmingly agree that the traditional banking experience must be enhanced to deliver more value to banks and customers. Moreover, there’s broad agreement that the right technology can drive the digital experience, helping transform legacy services by offering new features, improved mobility, enhanced security for transactions, and more. Banks are investing in IT accordingly.

T-Mobile launched Mobile Money in an effort to provide the benefits of a checking account to "unbanked" users who don't have one. The program couples a smartphone money-management app with a reloadable T-Mobile Visa Prepaid Card that offered "many reduced fee or $0 cost services" for its customers. Customers can use Mobile Money to access services such as direct deposit paychecks, depositing checks from capable smartphone cameras, making retail purchases, paying bills and withdrawing cash from more than 42,000 ATMs without paying extra fees.

Google Cloud Platform (GCP). GCP runs on the same infrastructure and private fiber network that powers Google, giving the scale needed to run training algorithms, portfolio analysis, and risk modeling at the speed of banking business. Spin up workloads faster than other clouds, including clusters with a few hundred (or thousand) cores in minutes. Recently HSBC are moving their data to Google Cloud Platform (GCP).

Apple provides financing to Business for its products regarding payment structures and leasing, Apple Education Finance Program offers school or university financing options that support their goals. Flexible terms make it easy to upgrade and to include Apple products at the same time, Consumer financing etc