Google parent Alphabet (GOOGL), Facebook (FB), Alibaba (BABA), Amazon (AMZN), and Baidu (BIDU) have the largest cash holdings among their peers in the Internet sector. A large amount of cash on hand means a lot for these companies given the dynamic nature of their industry.
With a strong war chest, it becomes easy to diversify into new markets, keep pace with the competition, and invest in more rapid growth. As competition increases in the online advertising and e-commerce sectors, players are investing in technologies such as AI (artificial intelligence) to gain an edge over competitors.
Google parent boasts a $94.7 billion war chest
Alphabet was sitting on $94.7 billion in cash and short-term investments as of the end of 2Q17. The amount rose from $92.5 billion in 1Q17 and $78.8 billion in 2Q16.
A number of the companies under the Alphabet family are active in AI research. For example, Waymo is developing a technology that enables vehicles to drive themselves safely on public roads. This project involves a lot of work in AI and machine learning.
Alibaba leverages technology to fight counterfeits
Facebook was carrying $35.5 billion in cash and short-term investments on its balance sheet at the end of 2Q17. The company’s cash holding has increased steadily over the years.
Alibaba was sitting on $22.5 billion in cash and short-term investments as of the end of its fiscal 1Q18, which corresponds to 2Q17 (June quarter). Alibaba is also burning cash on AI research as it tries to leverage technology to rid its online marketplaces of counterfeit goods.
Amazon was carrying $21.5 billion in cash and short-term investments on its balance sheet at the end of 2Q17, while Baidu’s cash holdings at the end of 2Q17 were $17.3 billion.
Other Internet companies with strong financial muscles
eBay, PayPal, Twitter, Snap, and Square are other Internet companies with substantial cash holdings.