But if you look at the specific areas companies are investing in, it should be a positive in the long run.
Take Alphabet for example. The higher TAC came as a result of more search coming from mobile. That’s a great sign that Google is diversifying beyond desktop. On top of that, the company saw its operating loss narrow in its “other bets” segment – this includes “moonshot” projects like driverless cars – which shows some financial discipline from Alphabet.
Amazon meanwhile is trying to dominate every sector under the sun from content to food, shown by its near $14 billion acquisition of Whole Foods. It was a bold move, one that should raise some eyebrows from investors, but also show the company’s ambition. And spending is something that Amazon has convinced investors is a positive.
“As investors, everyone knows that Amazon really doesn’t care about the bottom line,” Michael Yoshikami, founder of Destination Wealth Management, told CNBC last week. And this is a good way to see a lot of these tech businesses.
“What you’re buying it for is top-line growth, revenue growth, market share — and I suspect when you go through the numbers you’re going to see Amazon is making great progress,” he said.
