The coronavirus pandemic accelerated changes in consumer habits and the digitization of enterprises, boosting the business of many tech players that have been providing the tools to enable such changes. As a result, the following three tech stocks made investors billions in 2020.
1. Microsoft
This year, Microsoft (MSFT 0.37%) paid $15.5 billion in dividends and repurchased $16.4 billion worth of shares. Yet those impressive numbers pale in comparison to the $493 billion increase in the company's market cap to $1.69 trillion as the stock price surged by 42% since the beginning of the year.
The tech giant grew its public cloud infrastructure business, Microsoft Azure, to become a strong challenger to Amazon's Amazon Web Services (AWS). Azure's market share for cloud infrastructure services increased to 19% during the third quarter of 2020, up from 17% one year ago.
In addition, Microsoft met enormous success with its various enterprise and consumer products, such as the productivity suite Office 365 and the collaboration solution Microsoft Teams. Also, shelter-in-place orders favored the consumption of the company's gaming services and products.
Given its increasingly huge scale, Microsoft has been improving its profitability in 2020. And with its large cash and cash equivalents in excess of its total debt by $74.4 billion at the end of last quarter, shareholders can expect to receive extra billions in the form of dividends and share buybacks for the foreseeable future.
Image source: Getty Images.
2. Zoom Video Communications
In contrast with Microsoft, the video communications specialist Zoom Video Communications (ZM 0.05%) didn't pay a dividend and didn't repurchase any shares during 2020. But shareholders made billions by just holding the stock throughout the year. The stock price increased by 501% during that time frame, which corresponds to an increase in the market cap of $98.2 billion.
As the need for remote communications surged during the coronavirus pandemic, consumers and enterprises massively adopted Zoom's simple and easy-to-use video communications platform. Given its sudden and unexpected success, the company faced several significant cybersecurity challenges during the first half of the year, but that hasn't scared users away.
In addition to dealing with its security issues, the company has been expanding its core video communications offering into a unified communications platform, partly thanks to its recent Zoom Phone offering. As an illustration, this year, the research outfit Gartner included Zoom for the first time in its magic quadrant for unified communications as a service, positioning the company as a leader based on its ability to execute and its completeness of vision.
As a result of this strong execution, the number of Zoom customers with more than 10 employees surged by 485% year over year to 433,700 during the last quarter, which led to stellar year-over-year revenue growth of 367% to $777 million.
3. Apple
Even more impressive, Apple (AAPL 1.27%) shareholders made close to $1 trillion in 2020. The company's market cap increased by $954 billion, or 80%, since the beginning of the year. In addition, shareholders received $14.1 billion in dividends, and the company spent $52.5 billion in share buybacks by the end of September.
Despite the closure of many stores for several months because of the pandemic, Apple posted outstanding results throughout the year. In particular, the number of paid subscriptions across all services increased by 135 million in one year to 585 million at the end of last quarter, which led to all-time record revenue from the app store, cloud services, music, advertising, and payment services.
Thanks to its impressive results in its services and wearable, home, and accessories segments, Apple has become less risky as it has reduced its dependency on the iPhone. During the last quarter, the company's flagship product represented 41% of total sales, down from 53% in the prior-year quarter.
Given Apple's multibillion-dollar quarterly profits and $79.4 billion of cash, cash equivalents, and marketable securities in excess of total debt at the end of last quarter, shareholders should expect significant dividends and share repurchases to continue going forward. Indeed, management is aiming at bringing the company's net debt to zero over the long term.
