Warren Buffett has a famous saying - we find out who is swimming naked when the tide goes out. In the same way, we learn which companies are 'swimming naked' during bear markets and periods of adverse economic conditions.

It's notable that tech companies are facing a combination of declining top lines due to a slowing economy and lower valuations due to rising rates. Therefore, tech companies with lofty valuations and speculative missions have been the hardest to fall. Those that have outperformed have maintained revenue growth and are cash flow positive.

Among the mega-cap tech companies, we also see similar diffusion. Apple (AAPL  ) is proving to be a winner as its top and bottom lines have taken negligible hits. As a result, its market cap is now equivalent to the market caps of Alphabet (GOOGL  ), Amazon (AMZN  ), and Meta Platforms (META  ).

Notably, the latter 3 companies all have fallen from the $1 trillion+ club, while Apple and Microsoft (MSFT  ) are firmly still in the club. A major factor is that Google and Meta are seeing a sharp decline in revenues as advertisers cut back on spending due to a slowing economy. Amazon is seeing a similar effect when it comes to consumer spending, and people returning to old habits in terms of in-person shopping. Finally, all 3 companies had been aggressively hiring and looking to expand into new areas which doesn't seem wise in this environment where companies and investors are prioritizing free cash flow.

To compare as of last week, currently Apple has a market cap of $2.3 trillion, while Amazon, Meta, and Google's combined market cap is just under that figure. In contrast at the start of the year, these 3 companies had a cumulative market cap of over $4 trillion, while Apple had a $2.9 trillion valuation.

The discrepancy between the winners and losers only got more extreme following Q3 earnings season as Apple shares were flat while all 3 of the companies had losses of more than 10% as they disappointed investors in terms of their results and guidance. YTD, Apple is down 18%. In contrast, Meta is down more than 70%, while Amazon and Google have dropped more than 40%.