Stocktake: A handful of tech giants are driving almost all US market gains

Analysts say gains are largely linked to firms with AI technologies and are concerned by market’s extreme imbalance

The US stock market rally may be less healthy than it appears. Like many others on Wall Street, JPMorgan is concerned by the narrowness of the market advance.

It estimates interest in ChatGPT and artificial intelligence (AI) has driven more than half of this year’s gains in both the S&P 500 and the Nasdaq 100. Six AI-innovation stocks – Microsoft, Google parent Alphabet, Amazon, Meta, Nvidia, and – have gained some $1.4 trillion (€1.27trillion) in market capitalisation this year. Other mega-cap giants such as Apple, Tesla, and Berkshire Hathaway have also advanced but they have not done nearly as well as the aforementioned grouping, leading JPMorgan to surmise that AI hype is central to market gains.

JPMorgan also noted the performance of the next most valuable stocks in the index, those ranked outside the top 10 but inside the top 50. This grouping has lagged far behind its mega-cap brethren.

The end result is the top 10 stocks now account for 28.7 per cent of the index. That’s extreme – it’s higher than 96 per cent of historical readings. A handful of mega-cap giants are doing the heavy lifting.


In fact, the first quarter of 2023 “was led by the narrowest leadership ever in an up market”, says JPMorgan. Indices may be higher, but this “mega-cap crowding” is increasingly concerning.

Proinsias O'Mahony

Proinsias O'Mahony

Proinsias O’Mahony, a contributor to The Irish Times, writes the weekly Stocktake column