04 Sep 2020

Big Tech: Too Much Value Concentrated In Only A Few Ecosystems

Yahoo Finance
Big Tech: Too Much Value Concentrated In Only A Few Ecosystems

Microsoft Corporation (NASDAQ: MSFT) exceeded Wall Street expectations despite showing a slowdown in Azure revenue. But the story of Microsoft's growth over the past several years has been made by its Intelligent Cloud business. The still-raging coronavirus outbreak only fuelled its already booming business. Other four Big Tech names, Apple Inc. (NASDAQ: AAPL), Amazon.com, Inc. (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG) and Facebook, Inc.(NASDAQ: FB) worth nearly $5 trillion kept the fireworks going. This week, Zoom Video Communications Inc (NASDAQ: ZM) confirmed that tech and software are in for the win as the pandemic fuelled their already-existing growth.

Big Tech has led much of the market's gains. The outperformance of these companies against the broader market has already raised concerns that too much of the market's momentum is concentrated in just a few names. But Big Tech is an elite group of companies with a market cap of more than $1 trillion. However, investors are just as excited about other software gainers such as Dropbox Inc (NASDAQ: DBX) Adobe Inc (NASDAQ: ADBE) and Datadog Inc (NASDAQ: DDOG).

Datadog Provided Businesses With An Indispensable Tool

With people working from home and companies being managed remotely, Datadog's cloud monitoring became an indispensable tool. It was less than a year ago that Datadog made its public debut and its stock has surged 39% since it was priced at $27. The pandemic-induced lockdown made its services more valuable than ever, driving shares up 125% so far this year. More importantly, there is no end in sight. In the second quarter, revenue grew by 68% year-over-year, although decelerating slightly from the 87% growth it from the first quarter. But while Datadog has captured the hearts and minds of investors over the past year, it is facing fierce competitors. IBM (NYSE: IBM), Microsoft, Amazon.com, Inc.(NASDAQ: AMZN), Cisco Systems, Inc. (NASDAQ: CSCO) and Alphabet Inc(NASDAQ: GOOG) are among its biggest and scariest competitors. But there are a number of younger upstarts as well, including Splunk Inc (NASDAQ: SPLK), Elastic, New Relic Inc (NYSE: NEWR) and Sumo Logic just to name a few.

Companies need to keep their operations going with maximum efficiency. To do that, they need to identify any potential issues that can result in downtime and significant costs ahead of time. Datadog goes even a step further, as it provides valuable analytics and useful feedback that get to the root of the problem which is the best prevention against it happening again.


With the pedigree and deep pockets of its scary rivals, Datadog has to keep up the good performance if it wants to maintain its eye-catching growth. Its continued robust growth even helped it generate a profit for the second consecutive quarter which is impressive for a company that had its IPO debut less than a year ago. But all these extraordinary tech developments are causing ecosystems of companies to overlap more than ever before. Even Apple gained many new enemies by moving into the service-business. The business world is a jungle – and only the ones that provide the best value and service will win.

Source : Yahoo Finance

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