Why you should remain bullish on Big Tech
No polling data this week in Fortune Analytics. Instead, we’re using patent data as a proxy for companies on a high growth trajectory.
To help us, we reached out to Nasdaq to see their Patent Value Estimates (PVE) data. They have a proprietary algorithm that calculates the value of individual patents*. A growing patent portfolio doesn’t guarantee growth. But Nasdaq research does find it correlates with greater stock growth.
Here’s what Fortune Analytics found in the data.
The numbers to know
- … gain in the combined patent portfolio of FAAMG companies (aka Facebook, Amazon, Apple, Microsoft, and Google) between 2015 and 2021.
- … the total value of Samsung’s patent portfolio—the largest of any measured company in the world. It’s up 74% since 2015.
A few deeper takeaways
1. Big Tech is still, well, getting bigger.
The combined patent portfolios of Facebook, Amazon, Apple, Microsoft, and Google is now $67.2 billion—up from $29.9 billion in 2015.
On one hand that figure is very small compared to their market capitalizations. On the other hand, it shows they’re still focused on R&D. That sustained innovation coupled with their ability to buy up newcomers (hey, there are perks to major cash flow) makes a pretty good case for staying bullish on Big Tech.
2. Don’t underestimate Nvidia.
Back in 2016, Nvidia’s Jensen Huang co-founder was blunt about how competitive his industry is: “I always think we’re 30 days from going out of business…That’s never changed. It’s not a fear of failure. It’s really a fear of feeling complacent, and I don’t ever want that to settle in.”
And boy, is the chip maker serious about R&D: Between 2010 and 2021, Nvidia’s total patent value climbed 630%, Nasdaq calculates.
It’s also paying off. The chipmaker is now a global leader in AI. Since Jan. 2020, its share price is up a staggering 275% as demand during the pandemic for gaming and chips soared.
3. Samsung and Qualcomm to the moon?
I’ll be honest, when I reached out to Nasdaq for patent data I assumed that the likes of Amazon, Apple, and Microsoft would have the largest patent portfolios. I was dead wrong.
The top 2 in Nasdaq’s database are Samsung ($50.5 billion) and Qualcomm ($37.9 billion).
What’s going on? One word: 5G. Both of these firms are early leaders in the technology that is poised to explode in the coming years.
I’d love to know what you think of the newsletter. Email me with feedback at email@example.com.
*Methodology: Nasdaq’s PVE data is calculated on an indicator based Market Analogy method. Nasdaq says “it calculates the value of a patent as if it would be a traded good. The indicator based method for value determination is based on machine learning algorithms which are trained with a dataset of traded patents in the past where the paid prices are known.”
Subscribe to Fortune Daily to get essential business stories straight to your inbox each morning.