Much has been written about how massive and influential a handful of U.S. tech giants have collectively become. Observers have pointed to how their sales have grown to eye-popping levels, their massive and expanding reach in everything from consumer electronics to advertising to online services, and how their tremendous resources often make it very difficult for smaller rivals to compete.

Much has also naturally been written about how markets have rewarded these tech giants for their success by steadily propelling their shares higher, leading them to account for a giant portion of the Nasdaq's total market cap. Between them, Apple Inc. (AAPL) , Alphabet Inc./Google (GOOGL) , Microsoft Corp. (MSFT) , Facebook Inc.  (FB) and Inc.  (AMZN) are now worth about $3 trillion, or more than the annual GDP of every country except the U.S., China, Japan and Germany.

Such a combined market is of course not only a reflection of the growth the companies have delivered to date, but also the confidence investors have in their long-term competitive positions. Some of these tech giants -- Amazon, Facebook and Google come to mind -- have chosen to cash in on Wall Street's faith in them by willingly depressing near-term profits to make big long-term investments.

And now, all five are confident markets won't mind if they report only relatively low earnings figures relying on generally-accepted accounting principles (GAAP), rather than also reporting higher adjusted (non-GAAP) earnings figures that often back out items such as stock compensation, restructuring charges and acquisition write-downs.

On Thursday, Microsoft became the latest big-name tech company to announce it will only report using GAAP. As it is, the software giant had taken a relatively conservative approach to its non-GAAP reporting: While its non-GAAP figures would record deferred Windows 10 revenue on an up-front basis and back out "impairment and restructuring expenses," they still included stock compensation expenses, something that many of its tech peers don't do with their non-GAAP numbers. Microsoft's stock comp totaled $3.3 billion in fiscal 2017, which ended in June, up from $2.7 billion in fiscal 2016.

A Microsoft store.
A Microsoft store.

Nonetheless, Microsoft's non-GAAP numbers have been considerably stronger than its GAAP numbers. In fiscal 2017, the company reported GAAP revenue of $90 billion and EPS of $2.71, and non-GAAP revenue of $96.7 billion and EPS of $3.31 (Windows 10 revenue recognition was the biggest factor in the difference). To put this into context, Microsoft is trading for 22 times its trailing non-GAAP EPS, but 27 times its trailing GAAP EPS.

Jim Cramer and the AAP team hold positions in Apple, Alphabet and Facebook for their Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AAPL, GOOGL or FB? Learn more now.

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