Investors have been urged to differentiate between the business models of the US's big tech giants, as the so-called FAANG stocks continue their strong share price performance.
The recent US earnings season saw the FAANG cohort of the stockmarket post expectation-beating results.
Apple, Amazon, Alphabet and Facebook collectively added around $200bn to their market values after reporting on the same day.
Facebook posted its slowest revenue growth since its IPO but still added $42.6bn to its value, while Alphabet added $7.6bn despite posting its first revenue decline ever.
Investment director at Aberdeen Standard Investments Karolina Noculak said that this does not mean Google's parent company should be considered "a weak stock", but "quite the opposite".
She explained: "When we look at the declines in the advertising sector, compared to Alphabet's, the company saw only a 2% revenue decline versus the industry down 20%. Alphabet did very, very well."
"All of these companies had really strong quarters and all exceeded expectations. Some of them grew the earnings so enormously that it was not in any of the analyst projections, not even on the bullish end of the expectations spectrum. So really a remarkable, remarkable quarter."
Manager of Sarasin & Partners' Digital Opportunities fund Josh Sambrook-Smith observed that the differential in both firms' commercial performance reflected "the type of advertising they sell".
Sambrook-Smith suggested advertisers in Q2 seemed to have reduced their spending on search, as demand was weaker, which led Google to see a decline in revenue growth.
That reduction in search spend benefited Facebook, whose adverts are more versatile, as firms "clearly felt placing their advertising dollars higher up the funnel was a better way to invest their budgets".
This, said Raj Shant, portfolio specialist at Jennison Associates, shows investors must look "under the hood of the big tech companies and not discriminate between the business models".
"There are very real differences in quality and sustainability of the prodigious revenues and cash flows they are currently generating," he explained.
"While it is tempting to see big tech as one homogeneous entity, it is becoming increasingly imperative to appreciate this is far from the truth."
With the likes of Facebook, Google and their competitors more exposed to advertising revenues that are likely to become increasingly cyclically exposed, "other business models based on subscription revenues are likely to prove far more enduring", Shant reasoned.
"Similarly, e-commerce penetration may have leapt in recent quarters, but there is still a lot of the retail sales that could still migrate online.
"The migration to cloud-based services may also have accelerated sharply during the pandemic but could still have a long runway as corporates have seen the immense convenience and value moving functions onto the cloud can offer."
While sentiment remains positive on big tech, with Noculak noting "significant tailwinds" from a continued shifting or spending from offline to online, there are risks, too, with regulation front and centre.
Four of the cohort of big tech companies - Facebook, Google, Amazon and Alphabet - were accused of being "too powerful" and "engaged in behaviour that is anti-competitive" by the US House Antitrust Subcommittee.
The committee argued that some of these entities "need to be broken up", while "all need to be properly regulated".
Investors will eagerly await a report set to be published later this year that could recommend legislative changes. "These are super profitable companies that have built almost monopolistic positions, are now increasingly being challenged by regulators," said Noculak.
The investment director countered that the risk of regulation is unlikely to be a short-term consideration, "as there are more urgent things to deal with in this Covid world". However, as a sector with "very, very low regulation compared to other parts of the economy", it is "a longer term risk that can lead to a cap on future profits".
But senior markets economist at Capital Economics Oliver Jones noted the antitrust regime, under both Republican and Democratic leadership, has become "less and less stringent" since the 1980s.
"This suggests to us that a really significant regulatory push against, or break-up of, the big tech firms is highly unlikely in the absence of major political change," said Jones.
Alan Tu, portfolio manager of the T. Rowe Price Global Technology Equity fund, accepted regulators, politicians and judges are likely to come to different conclusions on the issue and urged investors to "pay attention as the debate continues".
However, he questioned whether these dominant firms are, actually, "stifling innovation and harming the consumer".
Tu believes the opposite may be true. "The ‘Amazon effect' has brought down retail prices, and popular services such as Google Maps or Instagram are free," he reasoned.
"Appreciation for the services provided by the platform companies during the pandemic has also changed the tone of the conversation, at least temporarily."
Others have drawn parallels with 2020's hearings and the monopolisation case brought agains Microsoft in the late 1990s and early 2000s, when regulators contemplated breaking the firm up, but decided instead to impose conduct remedies demanding the firm to stop behaving badly, Sarasin's Sambrook-Smith recalled.
That case, noted former assistant attorney general Bill Baer in a recent blog post, took more than three years from initial filing to settlement.