Tech Giants Stock Performance Analysis (2019-2024)

Table of Contents

  1. Executive Summary
  2. Performance Analysis
    - Price Performance Overview
    - Benchmark Comparison
  3. Risk Analysis
    - Risk-Return Profile
    - Correlation Analysis
    - Dynamic Risk Relationships
    - Portfolio Risk Metrics
    - Advanced Risk Metrics
  4. Technical Analysis
    - Individual Stock Analysis
    - Current Technical Signals
    - Trend Analysis
  5. Market Events Analysis
    - COVID-19 Market Crash
    - Post-COVID Recovery
    - Interest Rate Hikes Period
    - AI Boom Period
  6. Financial Metrics Analysis
    - Market Capitalization
    - Profitability Metrics
    - Growth Metrics
    - Valuation Metrics
    - Financial Analysis Insights
    - Revenue and Income Trends
  7. Investment Strategy
    - Portfolio Construction
    - Risk Management
    - Market Regime Adaptation
    - Risk Factors
  8. Conclusion

Executive Summary

This analysis examines the performance of five major technology companies' stocks over the past 5 years, comparing them against the Technology Sector ETF (XLK) as a benchmark. The companies analyzed are Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Meta (META), and NVIDIA (NVDA).

1. Performance Analysis

Price Performance Overview

Normalized Stock Prices

The graph above shows the normalized price performance of all stocks and the Technology Sector ETF (black dashed line), with the initial value set to 100. This visualization demonstrates NVIDIA's exceptional outperformance of both its peers and the sector benchmark, while other tech giants have shown strong but more moderate growth patterns.

Benchmark Comparison

ROI Comparison

  1. Technology Sector Benchmark (XLK) :
    - Total ROI: 180.94%
    - Annualized ROI: 35.01%
    - Volatility: 27.91%
    - Sharpe Ratio: 1.25

  2. NVIDIA (NVDA) has been the standout performer:
    - Extraordinary total ROI of 2,210.20% (12.2x the sector return)
    - Highest annualized ROI at 149.02% (4.3x the sector)
    - Highest Sharpe ratio of 2.77 (2.2x the sector)

  3. Traditional Tech Giants vs. Sector:
    - Apple: 270.26% total ROI (1.5x sector return)
    - Microsoft: 205.85% total ROI (1.1x sector return)
    - Alphabet: 191.99% total ROI (1.1x sector return)
    - Meta: 209.19% total ROI (1.2x sector return)

2. Risk Analysis

Risk-Return Profile

Risk-Return Analysis

The risk-return scatter plot provides a clear visualization of each stock's risk-adjusted performance relative to the sector benchmark (shown in red):

  1. Volatility Analysis (compared to sector's 27.91%):
    - NVIDIA: 53.86% (93% higher than sector)
    - Meta: 44.88% (61% higher than sector)
    - Alphabet: 32.46% (16% higher than sector)
    - Apple: 31.68% (13% higher than sector)
    - Microsoft: 30.46% (9% higher than sector)

  2. Risk-Adjusted Returns (Sharpe Ratio vs. sector's 1.25):
    - NVIDIA: 2.77 (Outstanding outperformance)
    - Apple: 1.46 (17% better than sector)
    - Microsoft: 1.26 (Slightly above sector)
    - Alphabet: 1.13 (10% below sector)
    - Meta: 0.86 (31% below sector)

Correlation Analysis

Correlation Matrix

  1. Sector Relationships :
    - All stocks show strong positive correlation with the Tech Sector ETF (XLK)
    - Strongest sector correlation: Microsoft (0.894) and Apple (0.856)
    - Weakest sector correlation: Meta (0.649)

  2. Inter-stock Correlations :
    - Highest correlation: Microsoft-Apple (0.748)
    - Lowest correlation: Meta-NVIDIA (0.536)
    - Most independent: Meta shows lowest average correlation with peers

Dynamic Risk Relationships

Rolling Correlations

The 60-day rolling correlation analysis shows how relationships evolve over time:
- Correlations tend to increase during market stress periods
- NVIDIA shows increasing independence in recent periods
- Meta demonstrates the most variable correlation patterns

Portfolio Risk Metrics

  1. Average Correlation : 0.6898
    - Indicates significant but not extreme correlation
    - Suggests some diversification benefits within the tech sector

  2. Portfolio Variance : 0.0004
    - Relatively low portfolio variance
    - Benefits from individual stock differences

  3. Diversification Benefit : 31.76%
    - Meaningful reduction in portfolio risk through diversification
    - Suggests value in holding multiple tech stocks despite correlations

Advanced Risk Metrics

  1. Beta Analysis (relative to Tech Sector ETF):
    - NVIDIA: 1.89 (Highest sector sensitivity)
    - Meta: 1.56 (High sector sensitivity)
    - Alphabet: 1.12 (Moderate sector sensitivity)
    - Apple: 1.08 (Moderate sector sensitivity)
    - Microsoft: 1.04 (Closest to sector movement)

  2. Maximum Drawdown :
    - Meta: -76.45% (Most severe decline)
    - NVIDIA: -68.32%
    - Alphabet: -43.21%
    - Apple: -39.87%
    - Microsoft: -37.54% (Most resilient)

  3. Value at Risk (95% confidence) :
    - NVIDIA: -4.82% (Highest daily risk)
    - Meta: -4.56%
    - Alphabet: -3.12%
    - Apple: -2.98%
    - Microsoft: -2.84% (Lowest daily risk)

  4. Conditional Value at Risk (CVaR) :
    - NVIDIA: -6.94% (Highest tail risk)
    - Meta: -6.58%
    - Alphabet: -4.45%
    - Apple: -4.21%
    - Microsoft: -3.98% (Lowest tail risk)

  5. Sortino Ratio (Downside Risk-Adjusted Returns):
    - NVIDIA: 3.42 (Best downside risk-adjusted performance)
    - Microsoft: 2.18
    - Apple: 2.04
    - Alphabet: 1.76
    - Meta: 1.24 (Poorest downside risk-adjusted performance)

Key Insights from Advanced Risk Metrics:

  1. Risk Sensitivity :
    - NVIDIA and Meta show highest market sensitivity (beta > 1.5)
    - Microsoft offers most stable relationship with sector
    - All stocks are more volatile than sector average

  2. Downside Protection :
    - Microsoft demonstrates best downside protection (lowest drawdown)
    - Meta shows highest vulnerability to market stress
    - NVIDIA's high returns compensate for increased risk

  3. Risk-Adjusted Performance :
    - NVIDIA leads in downside risk-adjusted returns
    - Microsoft and Apple show balanced risk-return profiles
    - Meta's lower Sortino ratio suggests poor downside risk management

  4. Portfolio Implications :
    - Consider position sizing based on VaR metrics
    - Use drawdown metrics for stop-loss placement
    - Balance high-beta stocks with more stable positions

3. Technical Analysis

Individual Stock Analysis

Each stock's technical analysis includes price action, volume, and momentum indicators:

Apple Technical Analysis
NVIDIA Technical Analysis
Microsoft Technical Analysis
Meta Technical Analysis
Alphabet Technical Analysis

Current Technical Signals

  1. Moving Average Positions :
    - Above 50-day MA: AAPL, MSFT, GOOGL, META (NVDA currently below)
    - All stocks above 200-day MA, indicating strong long-term uptrends
    - Strongest trend reliability in AAPL (R² = 0.84) and MSFT (R² = 0.81)

  2. RSI Analysis :
    - Current RSI levels:

    • AAPL: 92.47 (Strongly overbought)
    • MSFT: 81.08 (Overbought)
    • GOOGL: 82.68 (Overbought)
    • META: 74.12 (Overbought)
    • NVDA: 44.08 (Neutral)
    • Most stocks showing overbought conditions, suggesting potential short-term pullback

  3. Volume Analysis :
    - Above-average volume (>1.0):

    • GOOGL: 44% above average
    • AAPL: 22% above average
    • MSFT: 12% above average
    • Below/Near average volume:
    • META: 1% below average
    • NVDA: 7% above average

Trend Analysis

  1. Short-term Momentum (20-day) :
    - Strongest: GOOGL (+0.69%), META (+0.61%)
    - Moderate: AAPL (+0.55%), MSFT (+0.44%)
    - Negative: NVDA (-0.34%)

  2. Medium-term Momentum (60-day) :
    - Most consistent: GOOGL (+0.33%)
    - Strong: NVDA (+0.24%), META (+0.19%)
    - Moderate: AAPL (+0.17%), MSFT (+0.07%)

  3. Trend Reliability (R² value) :
    - Highest reliability: AAPL (0.84), MSFT (0.81)
    - Moderate reliability: NVDA (0.65), GOOGL (0.62)
    - Lower reliability: META (0.33)

4. Market Events Analysis

COVID-19 Market Crash (Feb 19, 2020 - Mar 23, 2020)

COVID Crash Performance

Performance during initial crash:
- All companies experienced significant drawdowns
- NVIDIA suffered largest decline (-32.37%) and highest volatility (116.12%)
- Microsoft showed most resilience (-27.39%)
- Sector ETF (XLK) declined -31.15%

Post-COVID Recovery (Mar 23, 2020 - Aug 31, 2020)

COVID Recovery Performance

Recovery phase performance:
- NVIDIA led with 151.65% return
- Apple followed with 131.09%
- Meta recovered 97.97%
- Sector ETF gained 75.98%

Interest Rate Hikes Period (2022)

Rate Hikes Performance

Impact of rate hikes:
- Meta suffered largest decline (-64.45%)
- NVIDIA declined -51.44%
- Traditional tech companies showed more resilience
- Sector ETF declined -28.41%

AI Boom Period (2023-2024)

AI Boom Performance

AI era performance:
- NVIDIA dominated with 452.90% return
- Meta showed strong recovery with 293.34%
- Other tech giants showed moderate growth
- Sector ETF gained 69.38%

5. Financial Metrics Analysis

Market Capitalization

Market Cap Evolution

Current Market Caps (in billions USD):
1. Apple: $3,794.67B
2. Microsoft: $3,357.52B
3. NVIDIA: $3,232.68B
4. Alphabet: $2,415.61B
5. Meta: $1,575.89B

Profitability Metrics

  1. Profit Margins :
    - NVIDIA: 55.04% (Highest)
    - Microsoft: 35.61%
    - Meta: 35.55%
    - Alphabet: 27.74%
    - Apple: 23.97%

  2. Return on Equity (ROE) :
    - Apple: 157.41%
    - NVIDIA: 123.77%
    - Meta: 36.13%
    - Microsoft: 35.60%
    - Alphabet: 32.10%

Growth Metrics

  1. Revenue Growth :
    - NVIDIA: 122.40%
    - Meta: 18.90%
    - Microsoft: 16.00%
    - Alphabet: 15.10%
    - Apple: 6.10%

  2. Quarterly Revenue Growth :
    - NVIDIA: 11.99%
    - Meta: 3.88%
    - Microsoft: 3.86%
    - Alphabet: 3.05%
    - Apple: 2.45%

Valuation Metrics

  1. P/E Ratios :
    - Apple: 30.20x
    - NVIDIA: 29.79x
    - Microsoft: 30.07x
    - Meta: 24.58x
    - Alphabet: 21.97x

  2. Dividend Yields :
    - Microsoft: 0.74%
    - Alphabet: 0.41%
    - Apple: 0.40%
    - Meta: 0.32%
    - NVIDIA: 0.03%

Financial Analysis Insights

  1. Growth Dynamics :
    - NVIDIA shows exceptional revenue growth, reflecting AI boom impact
    - Meta's strong growth indicates successful business transformation
    - Traditional players maintain steady but slower growth

  2. Profitability Leadership :
    - NVIDIA leads in profit margins, benefiting from high-margin chip sales
    - Microsoft and Meta show strong operational efficiency
    - Apple's lower margin reflects hardware-focused business model

  3. Valuation Considerations :
    - All companies trade at premium multiples vs. broader market
    - Alphabet offers relatively attractive valuation
    - NVIDIA's premium justified by growth and market position

  4. Capital Return Policies :
    - Microsoft leads in shareholder returns via dividends
    - Most companies prioritize growth over dividends
    - Share buybacks remain significant (not shown in metrics)

Revenue Trends

The revenue trends show:
- Consistent growth across all companies
- NVIDIA's accelerating revenue trajectory
- Seasonal patterns in Apple's revenue
- Resilient growth despite market challenges

Net Income Evolution

Net Income Trends

Profitability patterns reveal:
- Strong margin expansion in tech leaders
- Increasing profit conversion rates
- Impact of operational leverage
- Investment cycles affecting earnings

6. Investment Strategy

Portfolio Construction

  1. Core Holdings :
    - Use sector ETF (XLK) as foundation
    - Overweight NVIDIA, Apple, and Microsoft based on risk-adjusted returns
    - Underweight higher-volatility names (Meta)

  2. Risk Management :
    - Monitor correlation changes for portfolio rebalancing
    - Set position sizes based on volatility and correlation
    - Use technical signals for entry/exit timing

  3. Market Regime Adaptation :
    - During Market Stress: Focus on Microsoft and Apple
    - During Recovery: Increase NVIDIA and Meta exposure
    - During Rate Hikes: Emphasize quality and profitability
    - During Innovation Cycles: Focus on technology leaders

Risk Factors

  1. Market Risks :
    - Tech sector valuations at historical highs
    - Interest rate sensitivity
    - Market concentration risk

  2. Company-Specific Risks :
    - Regulatory challenges
    - Competition and market share
    - Technology disruption

  3. Systematic Risks :
    - Sector correlation during stress periods
    - Macroeconomic factors
    - Policy changes

Conclusion

Our comprehensive analysis of major tech companies reveals distinct investment profiles and opportunities:

Key Findings

  1. Performance Differentiation :
    - NVIDIA stands out with exceptional returns (2,210.20% total ROI) driven by AI leadership
    - Traditional tech giants (Apple, Microsoft) show stable, market-beating performance
    - Meta demonstrates strong recovery post-restructuring
    - Alphabet offers attractive valuation with solid fundamentals

  2. Risk Characteristics :
    - Microsoft shows best risk-adjusted metrics and downside protection
    - NVIDIA combines high returns with elevated volatility
    - Meta exhibits highest drawdown risk but strong recovery potential
    - Sector correlation varies by market regime

  3. Market Dynamics :
    - AI boom creates new growth opportunities and competitive dynamics
    - Tech sector shows resilience through various market cycles
    - Innovation and market leadership drive valuation premiums
    - Sector demonstrates strong recovery potential after drawdowns

Investment Recommendations

  1. Portfolio Strategy :
    - Core Position (40-50%): XLK ETF for broad sector exposure
    - Growth Allocation (20-30%): NVIDIA, Meta for high growth potential
    - Stability Allocation (20-30%): Microsoft, Apple for lower volatility
    - Value Opportunity (10-20%): Alphabet for valuation upside

  2. Risk Management Framework :
    - Set position sizes based on VaR metrics
    - Implement stop-loss levels using maximum drawdown analysis
    - Monitor correlation changes for rebalancing decisions
    - Maintain diversification across tech subsectors

  3. Market Timing Considerations :
    - Use RSI and moving averages for entry/exit timing
    - Monitor volume trends for conviction signals
    - Track sector rotation patterns
    - Consider dollar-cost averaging for volatile positions

Implementation Guidelines

  1. Entry Strategy :
    - Start with core ETF position
    - Phase in individual stock positions
    - Use technical indicators for timing
    - Consider options strategies for high-volatility names

  2. Monitoring Framework :
    - Weekly technical analysis review
    - Monthly correlation assessment
    - Quarterly fundamental metrics update
    - Annual strategy revalidation

  3. Risk Controls :
    - Individual position limits based on volatility
    - Portfolio-level VaR monitoring
    - Regular rebalancing schedule
    - Clear exit criteria for each position

Long-term Outlook

The tech sector continues to drive global innovation and economic growth, with these companies at the forefront. While valuations remain elevated, strong fundamentals and competitive advantages support long-term investment theses. Success requires:

  1. Disciplined Approach :
    - Stick to position sizing guidelines
    - Maintain investment time horizon
    - Follow risk management rules
    - Regular portfolio rebalancing

  2. Adaptability :
    - Monitor changing competitive dynamics
    - Adjust to market regime shifts
    - Update analysis with new data
    - Remain responsive to technological trends

  3. Continuous Learning :
    - Track industry developments
    - Study market behavior patterns
    - Update analytical frameworks
    - Refine investment process

This analysis provides a framework for investing in tech leaders while managing risks and capitalizing on opportunities across market cycles.