With little news to tamp down stocks (CPI and PPI were within guidance, and retail sales were actually stronger than expected), the march to restore Fab Five valuations continued. Four out of the Fab Five had increases in equity value last week (Google down $8 billion). Total increase in market capitalization thus far 2024 is $1.82 trillion. On a percentage basis, Microsoft is the laggard with an 11% increase. Three of the other Fab Five are up 17%, and Meta is on fire with a 49% gain.
The Fab Five had a summertime bubble. For the week ending June 7, the Fab Five had created $1.54 trillion in value. That jumped to $1.97 trillion in value the next week and eventually to $2.80 trillion for the week ending July 5th. The Fab Five is still down close to a trillion dollars since the peak from seven weeks ago, but to characterize this as a panicked crash is a dramatic overstatement.
Meanwhile, the Telco Top Five continues to steadily increase, with 80% of that value shift coming from T-Mobile. In second place is AT&T, with $18 billion in value created. As we commented in last week’s Brief, those who discount the value of AT&T’s cross-product bundling strategy will miss out on a substantial rebound. Our criticism of AT&T is that they should be creating more value than the $18 billion shown because they disproportionately benefit from population shifts to the south and west – they should be moving faster and are providing cable, Frontier and Starlink a foothold in these new suburbs, particularly in AT&T’s home state of Texas.
The major news story of the week was Google’s launch of their Pixel 9 smartphone (announcement from Google here). We noticed with particular interest the upgrade to a 42 MP front-facing camera and Google’s commitment to provide the next seven OS upgrades to all Pixel 9 owners. Also, all new devices come with a year of Google’s Gemini Advanced AI product, which features the ability to have a “free-flowing conversation with Gemini.”
The implications of the dramatic increase to the 42 MP front-facing camera on wireless networks are meaningful over time. Assuming others follow (and the hardware ecosystem history would clearly indicate that by 2026, higher resolution front-facing cameras will be mainstream), there will be more demand on upstream bandwidth (our guess is 3-5x more upstream bandwidth per household will be needed by the end of 2026 based on an upgrade from HD to 4K or higher from all sources). Current cable and fixed wireless networks are engineered for a 30 to 50:1 downstream ratio, meaning that nearly all of the capacity is reserved for streaming video. Said differently, the fiber to the home advocates have found their application, courtesy of Google.
That’s it for this week. File is below, and includes the latest MVNO, share count, net debt, and supplemental schedules described in the July 28 Brief. Comments on the new website format are encouraged, and more referrals to the website are always welcome.
Also, please note that we will not have an Interim Brief in two weeks (Labor Day weekend) as the entire Sunday Brief staff will be out of town.
