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points by kaycebasques 1 day ago | hide | 0 comments

Aside: why are Alphabet and Meta bucketed into the Communications sector rather than the IT one? Meta kinda makes sense, but Alphabet much less so.

Are there any other notable IT companies that aren't actually part of the S&P500 IT sector?

Edit: Apparently this happened in 2018 and is known as the de-FAANGing of the IT sector. I.e. FAANG used to all be lumped in a single sector. ^SPX tried to redistribute to spread the companies across different sectors. AMZN is another notable company now outside of IT sector. https://en.wikipedia.org/wiki/Communication_services_sector_...

It does kind of make sense for alphabet and meta considering their primary revenue driver is advertising and communication platforms respectively. That would put them into Media & Communications. IT is how they get to that. For amazon it's a bit more complicated, but still it's their retail that drives their revenue where AWS accounts for like ~20% of revenue.. however in amazon's case it's also AWS that also drives more than half of its profit.

It would be interesting (but perhaps useless) to try to weigh the companies by the percentage associated with whatever index or group you're trying to build - e.g, if you're building an IT Index, and AMZN makes 50% of revenues (or profit or however you'd value "that side" of the business) - you'd deweight them by half.

So if by market cap they'd be 8% of the index, you'd have them at 4%, because half of what they do isn't IT but something else (logistics, retail).

good point, i think it'd be valuable to bring in more of these companies to this chart. with it narrowly scoped here it's perhaps (likely) not telling the full story. i would imagine theres plenty of ballooned valuations still because of AI

This also means that the pre-2018 index had a fundamentally different portfolio of companies. So comparing today to anything pre-2018 is apples-to-oranges

I recall that there's an "extended tech" ETF that does a pretty good job of actually capturing the whole IT universe. Pretty sure I'm thinking of IGM: https://www.ishares.com/us/products/239769/ishares-north-ame...

> This also means that the pre-2018 index had a fundamentally different portfolio of companies

o true. this is a classic reporting/analytics yoy comparison type blunder, that actually makes graph in OP kind of meaningless. much more surgical comparison is needed here. now i cant help but chuckle at the total absolute that is the headline lol. grab all "IT flavored" companies that exist today, find the ones that existed then, then compare valuations between those two periods. perhaps ignore the S&P "IT" classification entirely since that groupings definition is apparently now just a moving target between 2018 & now :shrug:

> Pretty sure I'm thinking of IGM:

actually really cool thanks for putting this on my radar

They're both advertising companies. IT is just the medium by which they do said advertising.