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Nvidia’s surge masks narrow US bull market

Chip maker accounts for more than a third of the S&P 500′s year-to-date gains

Jensen Huang, co-founder and chief executive of Nvidia. Photograph: Annabelle Chih/Bloomberg
Jensen Huang, co-founder and chief executive of Nvidia. Photograph: Annabelle Chih/Bloomberg
Proinsias O'Mahony
Sun Jun 09 2024 - 06:00

Nvidia has become the third technology stock to be valued at $3 trillion (€2.75 trillion), providing yet another reminder that big tech is still driving the US bull market.

Last year there was much agonising over the dominance of the magnificent seven, with many fearing the US rally was too thin and too reliant on a handful of mega-cap companies. The magnificent seven isn’t quite so magnificent these days, with Tesla tanking and Apple underperforming in 2024, but the so-called fab five – Microsoft, Nvidia, Alphabet, Amazon and Meta – are still flying high.

Indeed, Nvidia’s astonishing gains (it’s up 150 per cent in 2024) account for more than a third of the S&P 500′s year-to-date gains.

Narrow leadership means the outperforming US stock market is less dominant than it seems. Bloomberg’s John Authers notes an equal-weighted version of MSCI’s Europe index, which weighs each stock on an equal basis, has actually outperformed its US equal-weight equivalent over the past 18 months.

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US stock market leadership is partly a mirage created by a select group of superstar companies.

Proinsias O'Mahony

Proinsias O'Mahony

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