Topline: Leading technology giants like Apple, Microsoft and Google have led the way for the stock market’s rally in 2019, but heading into next year, transformational trends like 5G, cloud computing and the streaming content wars will all result in clear winners and losers, according to a new forecast from Wedbush analysts Daniel Ives and Strecker Backe.
- The rise of 5G: 2020 will be the year of the “5G supercycle,” the analysts predict, with Apple poised to emerge as the clear winner.
- FAANG stocks like Apple, Google and Amazon will continue to flex their muscles next year, especially as they “further expand into healthcare and banking verticals” through either organic growth or new acquisitions.
- Though these companies continue to face the threat of regulatory scrutiny, those headwinds will only result in fines rather than big break ups, with no significant business model changes, Ives and Backe predict.
- Cloud software is another transformational trend which will reshape the industry, leading to more competition between big tech players, such as for the $10 billion Pentagon JEDI contract earlier this year. The analysts forecast that Microsoft and its CEO Satya Nadella will “win the next stage of the cloud war” against Bezos and Amazon.
- As Microsoft’s cloud shift and its upgrades to Office 365 start to pay off, workplace messaging app Slack will also find it increasingly difficult to compete with Microsoft’s Teams initiative, Ives and Backe forecast.
- The streaming wars, which kicked off into a frenzy during the second half of 2019—thanks to new services like Apple TV+ and Disney+, will also have a clear winner, they predict: Disney and its CEO Bob Iger are a “juggernaut” that will disrupt 10% or more of Netflix’s user base.
Further reading: The analysts list several other trends to watch for in their 2020 predictions. They see California’s AB5 legislation, with its court battle impending, as a “gut punch” to the Gig Economy that will “throw a major wrench” into the business models of companies like Uber, Lyft, DoorDash and Postmates. Given the lack of profitability and competition from other food delivery players, Uber will also need to “significantly curtail or possibly shut down” UberEats next year. In terms of the growing cloud software business and its importance for big tech players, don’t write off Google yet, the analysts say. Google and its cloud initiative, GCP, will potentially “make a major strategic acquisition of a public cloud vendor” in a bid to catch up to Amazon and Microsoft, Ives and Backe predict.