Magnificent Seven drive bumper year for US stocks

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America’s stock market rally this year has been driven by bumper gains for its ‘Magnificent Seven’ tech giants.

Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla have climbed by between 50 per cent and 240 per cent in 2023.

Now worth more than £9trillion combined, they have been responsible for around two-thirds of S&P 500 gains this year.

The rise of Artificial Intelligence – a technology that some think could transform the world – helped fire up valuations.

And the prospect of lower interest rates next year makes bets on the future earnings of growth stocks more attractive.

Bumper gains: Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla have climbed by between 50 per cent and 240 per cent in 2023

Nvidia shares rose more than 200 per cent, taking its value to nearly £1trillion, thanks to demand for its chips for use by AI programmes such as ChatGPT, which produce human-like content from poems to software code.

Hubert de Barochez, economist at Capital Economics, recently told clients: ‘US equities’ out-performance is due almost entirely to the few industries that include ‘Big Tech’ firms. 

While we expect a broader stock market rally next year, we suspect those industries will keep leading the way.’

Dan Ives, tech analyst at Wedbush Securities, said: ‘In our opinion the new tech bull market has begun.’ But Laith Khalaf, at AJ Bell, said expectations for the stocks are now so high that it could leave them vulnerable.

source: dailymail.co.uk


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