Nvidia has recently joined the ranks of technology stocks valued at a whopping $3 trillion (£2.75 trillion), reinforcing the notion that massive technology-based corporations continue to boost the US bull market. In the previous year, there was plenty of concern over the overdependence of markets on seven huge companies, known as ‘the magnificent seven.’ However, the status of these power players has slightly declined, with notable underperformance from giants like Apple and Tesla in 2024.
Nevertheless, the ‘fabulous five,’ comprised of Microsoft, Nvidia, Alphabet, Amazon and Meta, are still making considerable headway. Nvidia’s impressive surge in value – a robust 150% increase in 2024 alone – is accountable for more than one third of S&P 500’s gains in 2024. This suggests the US market is not as dominating as it appears, considering this relatively small group has demonstrated such outperformance.
While this group’s success gives an impression of a dominant US market, closer inspection reveals a different story. John Authers of Bloomberg made a noteworthy point, stating that MSCI’s equal-weighted Europe index, which gives equal weight to all stocks, has surpassed its US equivalent over the last year and a half. This is a signal that the perceived supremacy of the US stock market is perhaps just an illusion, created by a few standout companies.