The trillion-dollar race to the highest market capitalization in Wall Street history has left Alphabet on the sidelines at a "lowly" $750 billion market cap. But not all the headlines are for giants only.
Take Alphabet for example. The stock has lagged, up a mere 4% YTD, but it scored a few headlines yesterday for announcing that production of its proprietary servers (the mighty Search Engine doesn't fill its data centers with off-the-shelf computers) is moving from China to Taiwan.
That's a big deal because it reduces tariff risk, keeping a world-class technology platform nimble as operations flow out of countries where trade walls are rising. Alphabet is staying in the most efficient parts of the world the globe can offer.
Admittedly, the company's hardware exposure here was never enormous, but pivoting away from the mainland proves that management is awake and adjusting course when the international landscape changes. Sure, Alphabet will stop providing the Android operating system to Huawei phones. People in Asia who like the Android experience will simply keep buying from Samsung and other manufacturers . . . real revenue destruction is unlikely.
And if Alphabet is protecting its supply chain from tariffs and its core markets aren't in serious danger, we fail to see why the stock is down 15% since the trade wars heated up six weeks ago. It might take a little more time to join the $1 trillion club, but the day is coming.
Furthermore, if Alphabet can shift its supply, so can every other Big Tech company on Wall Street. Supposedly factories in Taiwan and elsewhere are ready and waiting to put every iPhone together without ever passing through Chinese territory, which is great news for Apple and its partners.
Meanwhile, real wealth is being created for Technology shareholders attuned to day-to-day industry developments. Splunk, for example, soared 6% on Monday after Salesforce.com made its biggest acquisition to date, paying $15 billion for Big Data company Tableau. A few people think Splunk is a merger target as well, but the news is even better if the company remains independent.
Splunk has had a long-term partnership with Tableau to cooperate on Big Data projects for their separate customers. If Splunk had to create a solution that required outside expertise, Tableau was the first company they'd call, and vice versa.
Now that Salesforce is going to be pushing its customers toward Tableau services, a lot of those applications will still require Splunk's expertise. In effect, Splunk is now a legacy marketing partner for Salesforce, which brings over 150,000 enterprise relationships and nearly 4 million individual users to the table.
The buyout was good news for Tableau. It's even better for Splunk, giving the company all the benefits of a powerful friend while letting it retain its independence. All the upside, while keeping the stock alive to keep climbing. We love it.