Big Tech companies mainly Apple, Alphabet, Amazon and Microsoft posted solid financial performance in first-quarter earnings
As tech and artificial intelligence (AI) boom across the world, S&P 500’s five biggest companies now have a combined market capitalization worth nearly $9 trillion. This roughly projects a 25 percent weightage of these stocks on the benchmark index.
The top tech companies boosting S&P 500’s market cap are Apple, Microsoft, Alphabet, Amazon and Nvidia. The development was first tweeted by TheBoomBust.com.
Today’s five biggest stocks Apple, Microsoft, Alphabet, Amazon and Nvidia have a combined market cap of about $8.7 trillion, almost 25% of the S&P 500 cap and about 3.2 times the $2.7 trillion Russell cap
— TheBoomBust.com (@BbSignal) May 20, 2023
The S&P 500 represents a broad cross section of large US companies, giving index investors an attractive way to diversify their money while betting on US economy. The benchmark index is weighted by market cap, which is why the big five tech companies have such a dramatic influence. The index’s entire market value is about $35 trillion.
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According to a Bloomberg report, this year’s tech rally has lifted Apple, Microsoft, Alphabet and Amazon at least 30 percent and doubled the value of Nvidia and Meta. That’s given a 26 percent boost to the Nasdaq 100, almost three times the S&P 500’s gain.
However, the report further stated that based on the relative strength index, the ratio between the S&P 500 and the Nasdaq is now heavily oversold. It is also approaching a seven-year downtrend line, off which it bounced last year. The S&P 500 meanwhile appears to be on the cusp of a breakout, having closed at its highest level since last August on May 18, 2023.
Age of AI
“If you want to catch the brisk recovery rally in tech stocks this year, you’d better buy shares exposed to artificial intelligence, such as Nvidia Corp., or cloud computing and avoid the popular behemoths like Apple Inc., Google-parent Alphabet Inc. and Meta Platforms Inc.” This was uttered by Zehrid Osmani, manager of Franklin Templeton’s $158 million FTGF Martin Currie Global Long-Term Unconstrained Fund
This said, stocks exposed to AI have outperfomed so far. Big Tech companies mainly Alphabet, Amazon, Meta and Microsoft posted solid financial performance in first-quarter earnings. Investors, too are parking most of their money in stocks best able to take advantage of the AI revolution.
The robust performance proves that despite being tied to economically sensitive areas such as advertising and IT spending, the tech industry’s biggest players have ridden out recent economic uncertainty in surprisingly good shape, backed significantly by AI, the launch of a revolutionary version of OpenAI’s ChatGPT, and drastic job cuts to remain resilient.
Nvidia, for example, has witnessed its stock surge 116.55 percent since the start of 2023, making it the best-performing scrip so far on the S&P 500. The company has a market cap of $771 billion.
As reported by Business Insider, investors see Nvidia as well-positioned to take advantage of the AI boom, given it;s the number one producer of graphic chips needed for high-intensity computing.