Insight into America's Magnificent 7 in Technology - Prat 2

　　The term “Magnificent 7” was first coined by Bank of America analyst Michael Hartnett. The term was used to describe seven American tech companies that have strong market leadership, significant technological influence, and stable, profitable operations, and which have a healthy balance sheet. These companies are collectively valued at over $15 trillion.

　　The “Magnificent 7” include: Alphabet (Google's parent company), Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla. Their businesses primarily focus on fields such as artificial intelligence, cloud computing, online retail, software services, and electric vehicles.

Alphabet

　　Market Cap: $2.26 trillion.

　　In 2015, Google established Alphabet as a new holding company, with Google becoming a subsidiary of Alphabet. The innovative departments previously operating under Google were spun off into independent companies under the Alphabet umbrella, including autonomous vehicle company Waymo, life sciences company Verily, smart home company Nest, biotechnology company Calico, Google Fiber, Google Ventures, Google Capital, artificial intelligence company DeepMind, and Google X.

　　Image Source: thestreet

　　“Only by making engineers love their work can you ensure work efficiency.”

　　In the Google ecosystem, engineers are at the top of the food chain. Many articles describing Googles innovative spirit mention the “20% rule”—where each engineer can freely allocate 20% of their work time. In other words, Google engineers can spend one whole day each week working on anything they choose. Many famous Google products have come from this policy, such as the dominant email service Gmail, Google's most profitable ad tool AdSense, and Google Maps, which has over 150 million monthly active users.

　　Since the downturn that began in 2022 has swept through Silicon Valley, large companies' primary strategy has been to protect their core business. One measure is layoffs, and another is scaling back innovation. In January 2023 alone, Google laid off 12,000 people, including 80 Waymo employees, about 4% of Waymos total workforce.

Amazon

　　Market Cap: $1.94 trillion.

　　Amazon is one of the worlds largest e-commerce platforms, with a vast user base and immense sales data. How to utilize this data to optimize products and services, and improve sales performance, has been an ongoing challenge and focus for Amazon.

　　Amazon has driven its development through several key milestones.

　　In 1997, Amazon introduced the “Customers who bought this also bought…” feature, which recommended related products based on customer purchasing behavior—a pioneering personalized recommendation algorithm. In 2000, Amazon launched the “Best Sellers” feature, which ranked products based on sales data and reviews—a precursor to Amazons search and sorting algorithms. In 2004, Amazon unveiled the “Amazon Machine Learning Platform,” allowing sellers and developers to create their own machine learning algorithms to better analyze and utilize sales data.

　　In 2006, Amazon introduced “Amazon Web Services (AWS),” a cloud computing platform offering various services including data storage, computing, and analysis. In 2009, Amazon launched “Amazon Advertising,” allowing sellers and brands to advertise on Amazons platform and use sales data and user behavior to optimize ad performance.

　　Today, e-commerce is undergoing significant changes, from the rapid development of AI to greater emphasis on price and sustainability.

　　Amazons 2024 strategy focuses on using dynamic pricing to balance competitiveness and profitability, leveraging consumer trend data to enhance competitiveness, using discounts to boost sales and address threats, directing traffic to Amazon through social media, and utilizing ad automation to maximize sales during Prime Day and other events.

Meta

　　Market Cap: $1.24 trillion.

　　In 2004, Mark Zuckerberg founded Facebook at Harvard University. This social platform quickly gained global popularity and changed the way people interact. With a surge in users, Facebook expanded its business and acquired popular apps like Instagram and WhatsApp.

　　Image Source: 1000logos

　　From Facebook to Meta: In October 2021, Zuckerberg announced a rebranding of the company to Meta, shifting focus towards developing the metaverse by integrating virtual reality (VR) and augmented reality (AR) technologies.

　　Meta is also working on developing more natural human-computer interactions, including gesture recognition, voice control, and eye-tracking technologies. It utilizes artificial intelligence (AI) and machine learning (ML) to provide smart content recommendations, virtual assistants, and natural language processing.

　　As a company primarily reliant on advertising revenue, Metas metaverse strategy also depends on precise advertising and data analysis. Through user behavior data in the metaverse, Meta can deliver personalized ads and services. Meta also offers robust development tools and platforms for developers, encouraging users and third-party developers to create and share content in the metaverse. Through revenue-sharing models, Meta profits alongside content creators.

　　Despite significant progress in VR and AR technologies, Meta still faces technical challenges such as device portability, image processing capabilities, and network latency. Overcoming these technological hurdles requires ongoing research and innovation.

Tesla

　　Market Cap: $772.024 billion.

　　Tesla, as a leader in the electric vehicle industry, has a development history that reads like a saga of electric revolution. Since its founding, Tesla has continually led the automotive industry transformation with its innovative technology and disruptive products.

　　Image Source: Tesla

　　Tesla‘s development began in 2003, founded by Martin Eberhard and Marc Tarpenning. The company is known for advancing electric vehicle technology and renewable energy solutions. Tesla’s first electric car was the Roadster, released in 2008, which redefined the auto industry with its high performance and zero-emission driving experience.

　　Tesla not only manufactures electric vehicles but also develops and produces energy storage systems and solar products. Its Powerwall home battery storage system and Solar Roof solar tiles are representative products of its energy division.

　　Recent Tesla quarterly financial reports show that overall revenue exceeded expectations, driven by growth in the energy business, though sales of its core automotive business continue to decline. The report disclosed that in the second quarter, Tesla deployed energy storage products Megapack and Powerwall at a record high of 9.4 GWh, with revenue and gross profit from energy generation and storage also hitting new highs. The report also noted that Tesla's more affordable vehicle models are expected to start production in the first half of next year. These vehicles will utilize next-generation platforms as well as existing ones, enabling production on the same assembly lines as current models. This approach allows Tesla to cautiously increase vehicle production with more efficient capital expenditures during uncertain times.