May 23, 2017

The prospect of Occupy Silicon Valley

Apple and Google are now valued higher than the GDP of all but America's two largest cities, according to a new BofA Merrill Lynch Global Research report.

Data: BofA Merrill Lynch Global Investment Strategy, Bloomberg, Bureau of Economic Analysis, BofAML estimates; Notes: Current market cap vs. 2016 real GDP; Chart: Andrew Witherspoon / Axios
Data: BofA Merrill Lynch Global Investment Strategy, Bloomberg, Bureau of Economic Analysis, BofAML estimates; Notes: Current market cap vs. 2016 real GDP; Chart: Andrew Witherspoon / Axios

What it means: There is a growing concentration of wealth among a small number of tech companies that are mostly based in the same geographic regions (Silicon Valley and the Pacific Northwest). And that could ultimately lead to social unrest, particularly when juxtaposed against Trump-era economic nationalist. From the BAML report, which is titled Occupy Silicon Valley:

"It could ultimately lead to populist calls for redistribution of the increasingly concentrated wealth of Silicon Valley as the gap between tech capital & human capital grows ever-wider."

What it doesn't mean: Amazon is not, for example, actually more valuable than its home base of Seattle, as metropolitan GDP doesn't account for broader economic or security values (let alone real estate, infrastructure, etc.).

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