At the end of 2Q'20, here is the Net Cash balance (Cash-ST and LT debt) of the big tech:
$AAPL +73 Bn
$GOOG +106 Bn
$MSFT +54 Bn
$FB +48 Bn
$AMZN -19 Bn
Total net cash balance of big tech: $263 Bn
If you are shareholder of any of these big tech, here's the base, bull, or bear case.
Base case is in a ZIRP world, there's not much upside to cash sitting in the balance sheet. Cash is cash.
What are the odds that they (at least some or maybe even just one of them) will make a very good use of this cash. I know their hands will probably be tied in case of mega M&A.
As their stocks keep rising, big tech will continue to attract bright kids out of college. I guess the worst case for big tech would be if their stocks become dead currencies for...
Mr. Market is perhaps trying to do exactly that, but it just never seems to discount enough? The same story repeats, and big tech trumps $SPY year after year.
Big tech continues to reinvent themselves by gradually destroying their own business models, and aggressively go to areas that makes sense. They get the courage to do that through their pristine balance sheets.
What Zuck or Bezos probably cares much more is the longevity of the business.
Protecting the size of the castle maybe more important than expanding it.
Would the dilemma lead to the inevitable downfall even though they know that's exactly how they would fail?
These are perhaps some of the best business models the world has ever seen, and we will speak about them for a long period of time regardless of the outcome.