Breaking Down The Big 7 Tech Players' Outsized Roles
Stocks have made some nice gains from the October 2022 lows and remain within spitting distance of the recent peak in August last year. In fact, the S&P 500 index is up about +20% from the October lows, prompting some to suggest that the worst is behind us.
This note is focused on the outsized role of the Big 7 Tech Players Apple AAPL, Amazon AMZN, Alphabet GOOGL, Microsoft MSFT, Meta META, Nvidia NVDA & Tesla TSLA in the markets strong performance this year.
Market bears justifiably point to the markets narrow leadership through these Big 7 Tech Players as a major argument why they dont see the rally having sustainable legs. This is a fair point, though we should note that we are starting to see other parts of the market join the leadership team in recent days.
The bears also point to recession risks, the inflation problem being more sticky than the market is appreciating, and significant downside risks to current consensus earnings expectations.