Megacap Tech Is Driving Most Of The Rise In Stocks

Stock markets are on the rise at the moment. This is good, but it is a very narrow leadership that is taking place.

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In the stock market, it is starting to look more and more like this year is going to be 2021. It looks like the tech stocks are pulling all the indexes up, as they did in 2021 as well.

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There doesn't seem to be much interest in what's going on, but the S&P 500 is back in its uptrend mode after a rough few weeks. There seems to be a lot of excitement among the technicians since the S&P is back to exhibiting a pattern of higher highs and higher lows that started in October and has continued since then.

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Almost all of this was driven by megacap tech's spectacular performance. Within the past three months, the following companies with $1 trillion (and above) market caps have seen astounding gains:

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This quarter's megacap tech:

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• Apple is up 22%

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• Microsoft is up 15%

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• Alphabet is up 14%

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• Amazon is up 16%

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Even the second tier of megacap tech has performed well.

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This quarter's megacap tech:

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• NVIDIA is up 80%

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• Meta is up 67%

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• Tesla is up 53%

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As a result of these seven megacap technology companies' gains, the S&P 500 has been the most successful index in recent history.

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There are around 493 stocks in total, but only five of them are outperforming the S&P 500 by more than 5%, Mike O'Rourke from Jones Trading pointed out in a letter to clients that the rest of the stocks are falling underperforming.

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Certainly, some of this is due to excitement over ChatGPT which has benefited NVIDIA and Microsoft in particular, as well as Amazon, Google, and Meta Platforms, according to some reported numbers.

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Can ChatGPT really be that exciting? Is it worth all the hype?

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“There is almost no doubt that generative AI has the potential to disrupt the world, but how much power will a $10 billion investment be able to exert on a multitrillion-dollar company?” O'Rourke asked.