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Mega Cap Technology Dominance

  • The performance of the S&P 500 year to date (+8.85%) has been heavily influenced by the stocks of only seven companies: Apple, Microsoft, Nvidia, Alphabet, Meta, Amazon, and Tesla. These mega-cap technology companies have played a significant role in driving the index’s overall performance. This concentration in a handful of companies reflects an incredibly concentrated market, particularly in the mega-cap technology sector.
  • In contrast to the remarkable performance of those seven, the performance of the remaining 495 stocks in the S&P 500 has been mixed. Collectively, these stocks have seen a decline in market capitalization by approximately 85 billion dollars, emphasizing the significant discrepancy between the performance of the selected mega-cap technology stocks and the broader market.
  • One contributing factor to the exceptional growth of these mega-cap technology stocks is the artificial intelligence theme. Companies like Apple, Microsoft, Nvidia, Alphabet, Meta, Amazon, and Tesla have been at the forefront of leveraging AI in their products, services, or underlying technologies. This thematic growth has attracted significant investor attention and contributed to the outperformance of these stocks in the S&P 500.