Is US tech the only game in town?

So far, it seems impervious to monetary tightening, political dramas in Europe and fears of over-ownership. But it’s a very crowded market, and a momentum reversal could prove painful.

In 2023, the ‘Magnificent Seven’ stocks – Apple*, Alphabet*, Amazon*, Meta*, Microsoft*, Nvidia* and Tesla* – collectively rose 106%, accounting for more than half of the 22% rise in the S&P 500.1

Remarkably, the same group seem to be repeating that feat in 2024, up another 35% on a market-cap-weighted basis, which would annualise for the full year at just short of another doubling in value.2

However, that headline hides growing dispersion in performance: of the seven names, only four have strongly outperformed the S&P 500 this year, with two underperforming and one outperforming only by a couple of percentage points. One, Nvidia, is seeing its advantage and importance to US and global equities stretch to what could be considered uncomfortable proportions. It’s up 166% year-to-date and has accounted for just over a third of the gain in the S&P in that time.