Change is afoot. Technology companies, long the heavyweights of the markets, are now entirely taking over. Last week, Nvidia became a $5 trillion company—roughly 17 percent of the gross domestic product of the United States, or about twice the GDP of Canada. Microsoft is now a $4 trillion company, and Alphabet $3 trillion.
One need only look at what happened in the markets last week to witness the influence of these companies. Last Tuesday, the S&P 500, the stock market index tracking the 500 largest companies in the United States, hit record highs, at the same time as nearly 80 percent of the stocks in the index fell. How was this possible? Because the value of the market is heavily concentrated in a select few AI-related companies. The stocks of the Magnificent Seven, for example—meaning Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla—constitute about one-third of the S&P 500’s value. When these companies are doing well, as they are now, it creates the appearance that “the market” is rising, no matter the relative weakness of other sectors.
