The "falling behind" of Tesla's stock price this year has made the concept of the "Big Seven" in the US stock market seem outdated. But the other tech stocks, the "Magic Six," are currently holding up a larger proportion of the market
A set of latest industry statistics shows that the weight share of the six major US technology giants in the S&P 500 index is higher than ever before!
According to data compiled by the media, Microsoft, Apple, Nvidia, Google's parent company Alphabet, Amazon, and Meta currently account for approximately 30% of the weight of the S&P 500 index, which is higher than about 26% at the beginning of the year. The S&P 500 index is calculated weighted by stock market value.
Behind this weight change, it is largely attributed to the recent sustained rise in Nvidia's stock price. The company released another excellent financial report after Wednesday's trading last week - revenue, profit, and Q2 guidance all exceeded market expectations. At the same time, the company also announced its latest stock split plan of 1 to 10.
Since then, Nvidia's stock price has risen by nearly 20%. This chip manufacturer, which has been a hot topic in recent years, has seen its market value climb by about $1.6 trillion this year, and is likely to surpass Apple in the near future to become the second highest valued company in the world.
Are technology giants increasingly influential in the market?
It is worth mentioning that although giant companies have long dominated the S&P 500 index, they have never reached such an exaggerated level before.
For most of the past thirty years, the combined weight ratios of the top six heavyweight stocks in this benchmark index have not exceeded ten percent. It was not until 2020 that the above concentration level exceeded 20% for the first time.
Another noteworthy sign of market changes is that even at the height of the Internet foam in 2000, only three of the six major heavyweights were technology companies, rather than being "wiped out" by technology giants today. In addition to Microsoft, Cisco Systems and Intel, the six major heavyweight stocks at that time also covered enterprises in different fields such as General Electric, ExxonMobil and Wal Mart.
And it is obvious that as the index weight composition becomes increasingly concentrated in a few technology companies, while people are expected to enjoy more dividends from technological innovation waves such as AI, risks may also be accumulating.
Global investors continue to flock to the aforementioned technology giants this year, mainly because they are betting that due to their huge market size and financial strength, they are in the best position to use artificial intelligence technology to expand revenue. But if this wave recedes in the future, the impact it faces may also be infinitely magnified.
A recent comparison has shown that although Nvidia's consecutive record highs have kept the S&P 500 index near historical highs, heavyweight indices such as the S&P 500 have shown clear signs of a pullback. Nvidia's strength largely overshadows the fatigue exhibited by its broader index components, which may be worth paying attention to at present.