Source: Zhitong Finance
Tony Pasqualillo, head of Goldman Sachs Hedge Fund, further emphasized the remarkable strength of US tech giants in terms of capital returns and capital redeployment.
A number of US tech companies have launched quarterly dividend plans for the first time. This move not only brought direct financial returns to investors, but also stimulated market enthusiasm, leading to a significant rise in the US stock market. Meanwhile, Tony Pasquariello (Tony Pasquariello), head of Goldman Sachs Hedge Fund, further emphasized the remarkable strength of US tech giants in terms of capital return and capital redeployment. He pointed out that including$Apple (AAPL.US)$,$Amazon (AMZN.US)$,$Alphabet-A (GOOGL.US)$Alphabet,$Meta Platforms (META.US)$,$Microsoft (MSFT.US)$,$NVIDIA (NVDA.US)$und$Tesla (TSLA.US)$Including these companies, the total investment in capital expenditure and R&D expenses is expected to reach 348 billion US dollars.
Pasqualillo further explained the capital reinvestment strategies of tech giants. He mentioned that these companies reinvest 61% of their free cash flow from operations back into capital expenditure and R&D. This ratio is three times that of 493 other companies in the S&P 500 index.
Goldman Sachs's forecast shows that the profit of the S&P 500 index increased 6% year over year in the first quarter, while the profit of the seven major US tech giants increased as much as 48% year over year. At the same time, 493 other companies experienced a 2% year-on-year decline.
Pasqualillo also mentioned last year's market performance. The performance of the seven major US tech giants was$Russell 2000 Index (.RUT.US)$Six times that. Although he is cautious about the sustainability of this outstanding performance, US tech giants' stock prices have risen 18% so far this year, while the Russell Index has risen 3%.
It is worth mentioning that these tech giants in the US stock market have recently begun to fully draw on the practices of old-school value companies — paying dividends and increasing the scale of stock repurchases. This shift towards paying dividends and improving the repurchase style can be said to provide strong evidence of their unrivaled financial strength.
Among them, Google's parent company Alphabet announced its first dividend last month, stating that it will pay a dividend of 20 cents per share and raise additional share repurchases to 70 billion US dollars, driving the stock price of Google's parent company up 10%. Currently, the market value is close to 2.1 trillion US dollars.
Earlier in February of this year, Facebook and Instagram parent company Meta announced their first dividend, saying they would pay a dividend of 50 cents per share, and announced that they would buy back another 50 billion US dollars of shares, which together contributed to the company's historic huge increase in stock prices. Furthermore,$Salesforce (CRM.US)$und$Booking Holdings (BKNG.US)$Other technology companies also announced dividends this year.
According to data compiled by the agency, the seven major US tech giants have spent nearly 58.5 billion US dollars on stock repurchases this year, while the capital allocated to dividends is less than 11 billion US dollars.
Meta's dividend, for example, was accompanied by repurchases of up to $50 billion, while Alphabet's dividend was accompanied by repurchases of $70 billion. Apple, which began paying dividends more than 10 years ago, also announced the largest share repurchase in the history of the US stock market last week: 110 billion US dollars, surpassing the historical record of 100 billion US dollars set in 2018.
Daniel Peris (Daniel Peris), senior portfolio manager from Federated Hermes, said, “These companies still prefer to buy back stocks, and the dividend yield is not high, but I think these companies are moving in the direction of dividends, which explains the problem.”
“As a dividend strategy investor, a company with a mature performance model announced dividends is a very good sign, but it is only very positive when yields continue to accumulate, and we haven't reached that level yet.” Perris said.
Overall, Pasqualillo's views reveal the superior capabilities of US tech giants in capital management and reinvestment, as well as their strong financial performance in the current market environment. The strategies and execution of these companies have not only brought significant growth to themselves, but have also provided a positive signal for the entire market.