What Investors in Apple, Alphabet, Facebook and Microsoft Really Want

Does anyone investing in mega-cap tech really know what they want from that group anymore?

Growth rates have cooled for Alphabet (GOOGLGet Report) , Amazon (AMZNGet Report) , Facebook (FBGet Report) , Apple (AAPLGet Report) , and Microsoft (MSFTGet Report) ; the companies are beset with government challenges regarding their dominance; and what they seem to offer could reasonably be captured by an exchange-traded fund with healthy returns and modest risk.

And yet, they are still some of the best-performing tech stocks this year, with Amazon up 34%, Microsoft up 35%, Facebook up a whopping 53%, and even Apple, despite worries about the iPhone, up 28%. All of those returns beat the Standard & Poors 500 Index’s 19% rise this year, and the Nasdaq Composite Index’s 24% return. Only Alphabet has lagged, rising just 9% this year.

About the only tech stocks that have performed better are some outliers that have surged on low expectations, such as chip maker Advanced Micro Devices (AMDGet Report) , up 82%, and the basket of high-priced software darlings such as Veeva Systems (VEEVGet Report) and Twilio (TWLOGet Report) .

The fact that expectations are more muted for Google and the rest, and the fact that they are covered in controversy, yet continue to perform on a stock basis, suggests something is a bit perverse in the trading of the shares.

With the exception of Alphabet, the stocks are trading like momentum names and moving on news, such as Facebook’s “Libra” crypto-currency announcement last month. They are certainly not trading with respect to fundamentals, which have somewhat deteriorated for most of them, save for Microsoft.

Alphabet’s revenue this year is expected to rise 17.3% to $160.5 billion, down from last year’s rate of growth of 24%. (Those numbers are for gross revenue at the Google business, before subtracting the cost of revenue, or “TAC” to sell ads.) Amazon’s revenue is expected to climb 18% to $275 billion, a rate…

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