There are a handful of stocks that account for the market’s heaviest weightings. At times, such as when their CEOs have been called in to testify before Congress, it seems that they could be in for trouble and therefore drag indices down with them. While recent volatility is probably attributable to a steep rise in interest rates thus far in 2021, borrowing costs are still below or in line with what they were in recent years. However, there is reason to suspect that Amazon.com, and particularly Microsoft, are at the middle of cybersecurity issues that may be systemic.

According to the CEO of CrowdStrike, a leading cybersecurity firm: the recent SolarWinds supply chain hack is partially attributable to Microsoft’s “Antiquated” architecture and there is concern about Azure, which is responsible for a substantial percentage of cloud computing. A Global Threat Report that is downloadable from CrowdStrike’s web site has similar critiques of Microsoft products. 

If that is not worrying enough, there is an emergency Alert from the Cybersecurity and Infrastructure Agency (CISA) about a vulnerability in Microsoft’s Exchange email server that has been exploited by hackers known as Hafnium who operate from China. Evidently there is a similar breach of a public administration system in the Czech Republic. Incidentally, a Czech “Watchdog,” its National Cyber and Information Security Agency, issued a warning about China’s Huawei and ZTE in 2018.

Additionally, in order to carry on the supply chain attack discovered in December of last year, believed attributed to a Russian grouping comprising over 1,000 software developers, reporting alleges that Amazon’s web servers (AWS) were used. Regulations pertaining to domestic infrastructure, specifically consumer privacy, may have increased the probability of AWS being targeted. Per available information, AWS is the nation’s largest cloud services provider.

Data and network security issues are pervasive but cloud computing is a central technology. IBM or salesforce.com (CRM) may be worth research. The former has been in decline for several years, and though its acquisition of Red Hat seems to be helping, its new CEO still has not stemmed decreasing revenue. There is also a corporate action in which the company will be split up and sold to shareholders, so if one invests in IBM today, he or she may have two different stocks before the year is over. Salesforce.com has really been a terrific stock and has recently offered to acquire Slack Technologies (WORK). Though shares of Work could be a cheaper way to invest in CRM (the offer is $26.79 + 0.0776 shares of CRM for each share of WORK), there apparently is no termination fee to benefit WORK shareholders if the deal does not go through.

Very serious cyberhacking, perpetuated by multiple nation states actors, is ongoing. Some of the biggest companies in computing have been targeted. Caution could actually be advisable toward shares of Microsoft, Amazon.com, or funds that heavily weight them.

***the author owns share of QQQ but has sold some because of weighting of MSFT, AMZN, & also TSLA***

***the author may invest in IBM, CRM, or WORK***

***3/6/21 the author may sell short MSFT***

***4/13/21 there is a notice to patch other Microsoft Exchange vulnerabilities***