The crisis makes Big Tech even stronger

Robert J. Teuwissen
3 min readApr 28, 2020


Avalanche of bad news

Every day, investors get an avalanche of bad news poured over them. The economy collapses, corporate profits evaporate, unemployment rises to record highs and national debts rise sharply. In amazement, investors and analysts look at the stock prices on the boards. How is it possible that, for example, the measure of the American economy — the S&P 500 index — only 11 percent is at a loss in the middle of what has already been called the worst economic crisis since the 1930s?

The Big Five

Below the surface, however, there is more going on. When the five largest companies are filtered out, the drop in the index suddenly turns out to be much bigger. These five shares together account for more than 20 percent of the total market capitalisation of the index. It is no coincidence that they are all five technology companies. Microsoft, Amazon, Alphabet, Apple and Facebook together are largely responsible for this relatively limited loss of the index.

Nasdaq 100

For example, the Nasdaq 100 index — in which the five are even more strongly represented, accompanied by other strong technology funds — appears to be in the plus this year. Yes, in the midst of this severe crisis, the technology index is on the upside. Online retailer Amazon and data centre Equinix even recently realised a new All-Time High, while other tech funds are not far from there. Now this Nasdaq 100 index has an impressive track record anyway. This index has never had a losing year since the previous crisis — the one of 2008.

Quality comes first

Where usually in times of crisis quality comes to the surface and the air is blown hard from overvalued shares, we now see a striking phenomenon. Where banks, insurance companies, oil companies and producers of consumer goods have lost up to half of their value, many “overvalued” tech funds remain nicely located. In fact, a number of them are continuing to rise, in the face of all the crises.

Creative destruction

Here is what the Austrian economist Joseph Schumpeter once so beautifully called “creative destruction” at work. Capitalism is characterised by regularly recurring periods of decline. In such a period of crisis, it says goodbye to outdated production methods and business models. New, innovative companies and production techniques take their place. A crisis is in fact nothing more than a necessary clean-up of the outdated system. In every crisis, the foundation is laid for a new ascending phase.

Digital acceleration

And that’s exactly what we’re witnessing right now. Microsoft Teams enables meetings from home, Amazon keeps the business running during the lockdown, Google makes anonymous location data and travel movements of users available to governments to combat the virus, Equinix enables the storage of all the increased data traffic and Nvidia stimulates the further development of artificial intelligence. Big Tech suddenly proves to be very useful during pandemics.

Huge cash buffers

During the corona crisis, the digital economy turned out to be just as vital as, for example, the energy supply. The fact that the tech giants also have huge cash buffers will only speed up this process. Cash not only enables them to get through this crisis unscathed but also — now that prices have fallen sharply — to take over other companies and thus further strengthen their own market position.

Quarterly figures

This week, the major technology funds will present their figures for the past quarter. Given the high expectations and the better than expected prices, it cannot be ruled out that the results will disappoint investors somewhat. But even a price correction will turn out to be no more than a new buying moment as this crisis is laying a new foundation for a new upward trend.

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Robert J. Teuwissen

Financial Services Entrepreneur, Hedge Fund Manager