With no end to the tech downturn in sight, the industry’s titans are eyeing new markets. The bigger, the better: in the past year the combined revenue of Alphabet, Amazon, Apple, Microsoft and Meta reached $1.5trn, so further growth that moves the needle can only come from a giant business. One candidate is finance. What is more, that industry generates petabytes of data, the crunching of which is a core competency of tech firms. And it is dominated by stuffy, old institutions. For a tech CEO, it looks ripe for disruption.
One such boss is Microsoft’s Satya Nadella. On December 12th his company announced a ten-year deal to provide cloud-computing and data-analytics services to the London Stock Exchange Group. As part of the transaction, Microsoft has agreed to pay £1.5bn ($1.9bn) for a 4% stake in the financial-services firm. This follows a tie-up last year between Google Cloud Platform, Alphabet’s cloud business, and cme, one of the world’s busiest derivatives exchanges. Weeks later, Amazon Web Services (AWS), that giant’s cloud division, announced a similar arrangement with the Nasdaq stock exchange.
It is not just exchanges. Almost all banks and insurers now use big tech’s cloud services, including increasingly sophisticated and tailor-made analytics, often powered by artificial intelligence. In October the Options Clearing Corporation became the first clearing house to get permission from American regulators to move its core operations on to the cloud.
Another big market is digital payments. These make purchases smoother for customers, while allowing tech firms to collect data to improve the overall user experience on their platforms, explains Alina Lantsberg of Oliver Wyman, a consultancy. Three in four iPhone users have now activated Apple Pay on their devices, compared with a third in 2018, according to Bernstein, a broker. Apple, Google and Meta also offer peer-to-peer transfers.
Amazon and Apple are experimenting with credit. Amazon helps merchants on its marketplace to secure loans, and in June Apple announced plans for a “buy now, pay later” (bnpl) service. Both firms already sell credit cards. Apple’s credit cards are issued and underwritten by Marcus, Goldman Sachs’s consumer-banking arm. But in June the iPhone-maker said it would handle the lending for its bnpl service. That may explain why it acquired Credit Kudos, a credit-reference agency, in March. Apple does not publish results for its consumer-finance business, but analysts put its annual revenue at between $1.7bn and $3bn—less than 1% of Apple’s total but not to be sniffed at.
Two factors could limit big tech’s financial ambitions. One is that financial firms are valued cloud customers, which could be lost if big tech starts to feel like competition. That was said to be the reason why Google binned its attempt to offer online checking and savings accounts in 2021. Amazon and Microsoft have their own cloud relationships to nurture.
Then there are the regulators, many of whom already hold a dim view of big tech and are watching its advances into finance closely. The Bank of England has said it wants to stress-test cloud providers because so many banks use their services. In America the Consumer Financial Protection Bureau has ordered the tech giants to share information on their payment systems. The further tech moves into finance, the more it may have to be treated like a bank. There is only so much disruption that financial regulators will brook.
To stay on top of the biggest stories in business and technology, sign up to the Bottom Line, our weekly subscriber-only newsletter.
© 2022 The Economist Newspaper Limited. All rights reserved.
From The Economist, published under licence. The original content can be found on https://www.economist.com/business/2022/12/15/big-tech-pushes-further-into-finance
The über-rich are keeping their powder dry in the new year, a poll of ultra-high-net-worth investors found. Then they'll "pounce."
(Bloomberg) — Cathie Wood bought Tesla Inc. stock amid a rout on Tuesday, reaffirming her conviction in the electric-vehicle producer even as many investors have bailed out due to the multiple headwinds the company faces.Most Read from BloombergChina’s Foreign Minister Says ‘Deeply Impressed’ With AmericansShopify Tells Employees to Just Say No to MeetingsMcCarthy Loses Third Round of Voting for House SpeakerFunds backed by Wood’s firm Ark Investment Management LLC bought more than 176,000 shar
“The Cinderella ride is over for Tesla, and Musk now needs to navigate the company through this Category 5 dark macro storm,” Tesla bull Dan Ives wrote in a Tuesday note.
The big market headline last year has been the steady fall in stocks. The S&P 500 tumbled 19% for 2022, and the NASDAQ has fallen a disastrous 33%. And while recent data shows that there may be some hope on the inflation front, there may still be storm clouds massing for this year’s stock market. In times like these, it’s natural to turn to the high-yield dividend payers. These stocks offer the twin advantages of a steady income stream through regular, reliable dividend payments – and dividend y
Phew. The S&P 500's horrible year that was 2022 is finally over. And analysts have picked their favorite spots.
Two top-notch dividend stocks, with yields of 7.2% and 8%, are ripe for the picking, while another income stock with a yield of nearly 70% could be in for a rough year.
You know it's time to be scared when a TikToker says so.
Apple (NASDAQ: AAPL) stock tumbled 4% through 2 p.m. ET on Tuesday, knocking the tech titan below $2 trillion in market capitalization for the first time since 2021, and putting Apple stock a full one-third below the $3 trillion market cap it hit a year ago. As its first stock action of the new year, BNP downgraded Apple stock from outperform to neutral this morning, and slashed its price target on the tech giant by 22%, to just $140 a share. BNP's downgrade is certainly weighing on Apple stock today, but it's worth pointing out that BNP may only be reacting to other news that necessitated the downgrade.
The 98-year-old investing legend has spoken.
Rivian fell short of its 25,000-vehicle production target for 2022, capping a challenging year for the electric-truck startup.
Winklevoss and his identical twin brother first rose to prominence through their lawsuit against Mark Zuckerberg, who they claimed stole their idea for Facebook.
Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett has a knack for outperforming Wall Street. This outperformance was on display, once again, during the 2022 bear market. Whereas the S&P 500 lost 19%, not including dividends paid, last year, Berkshire Hathaway's share price advanced 4%.
Few companies have successfully avoided the major global challenges of recent years. Problems such as Covid, extreme inflation and rapidly rising interest rates have prompted significant difficulties for a whole host of businesses across a range of sectors.
In this article, we will take a look at the 10 cheap semiconductor stocks to buy now. If you want to explore similar stocks, you can also take a look at 5 Cheap Semiconductor Stocks To Buy Now. The semiconductor industry is highly cyclical, meaning that demand for semiconductor products fluctuates in regular intervals. This […]
Warren Buffett is known for embracing a value investing model, which entails finding stocks that look undervalued relative to their intrinsic worth. It's why you'll often see stocks with low valuations in the Berkshire Hathaway portfolio. One of Buffett's newer positions in Berkshire is Brazilian fintech startup Nu Holdings (NYSE: NU), which saw its stock price fall nearly 60% in 2022 despite excellent performance.
Democrats released six years of Donald Trump’s income-tax returns on Friday, providing further insight into the former president’s tax situation. Trump and his wife, Melania, paid $0 in income taxes for 2020, according to a report released late Tuesday by the congressional Joint Committee on Taxation. The nonpartisan committee’s findings also raised several red flags related to the filings, namely Trump’s carryover losses, loans to his children that may or may not also be considered taxable gifts, and deduction-related tax write-offs.
Shares of Apple and Tesla are both trading lower on the first trading day of 2023.
Companies in The News Are: H, CHPT, NKLA, SO
This analyst says to keep an eye on Costco's stock for this important reason.
Boeing finished out 2022 strong and the new year is looking up, causing one analyst to hike his price target on the shares. Baird analyst Peter Arment raised his price target on Boeing shares to $250 from $210. Boeing stock was up 1.8% to $193.94.
