These 5 Companies Are Driving 96% of Stock Market Gains This Year — and They’re All Worth a Trillion Dollars
Chip maker Nvidia — which has been on a roll lately thanks to the AI craze — crossed the $1 trillion market cap mark earlier this week. This placed the company alongside giants Apple, Microsoft, Alphabet and Amazon.
So far this year, these five companies have raised their collective market cap by $2.9 trillion and represent an astounding 96% of the $3 trillion gains in the S&P 500’s market value this year, according to Fortune.
As Business Insider pointed out, this means the rest of the 495 companies in the S&P 500 contributed to just 4%, or $110 billion in gains.
“Today’s US price action is another reminder that this year’s favorable equity market performance is still about a handful of tech stocks,” economist Mohamed El-Erian tweeted. “Not only is the Nasdaq outperforming again but, also, the S&P 500 would be in negative territory were it not for #Nvidia.”
And the trend may only be beginning.
Shares of Nvidia are up an eye-popping 170% year-to-date, and were buoyed following the first quarter earnings release on May 24, which noted what some analysts called “jaw dropping” guidance for the next quarters.
In fact, the company gave revenue guidance for this coming quarter of $11 billion, according to the earnings release — which is more than 50% higher than the analysts’ forecast of $7 billion, per Dan Ives, Wedbush Securities analyst.
“The Street was all awaiting last night’s Nvidia quarter and guidance to gauge the magnitude of this AI demand story with many skeptics saying an AI bubble was forming,” Ives wrote in a note. “For any investor calling this an AI bubble (crypto, metaverse, now AI bubble thesis) we would point them to this Nvidia quarter and especially guidance which cements our bullish thesis around AI and speaks to the 4th Industrial Revolution now on the doorstep with AI.”
Ives added that the other beneficiary of this read through is Google, which despite stumbling at first on its AI vision has gotten its act together and is seeing massive AI demand within its enterprise and consumer ecosystem.
“In 22 years of covering tech stocks and large cap we have NEVER seen a guidance range of this magnitude on a large cap tech name and thus speaks to our thesis that the monetization of AI for stalwarts like Microsoft, Alphabet, Amazon, Oracle, Meta, Apple, and Salesforce is well underway in this ‘Game of Thrones’ Battle among tech players,” he added.
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