Stellar Nvidia leads tech gang of three

Chipmaker Nvidia last week became the first company ever to reach a $4tn stock market valuation – just 13 months after it reached $3tn, when it was behind only Microsoft and Apple, which had become the first $1tn company in August 2018.

Nvidia is now the clear leader of the so-called Magnificent Seven companies (with Microsoft, Apple, Amazon, Google parent Alphabet, Facebook owner Meta and Tesla) whose shares have disproportionately soared on growing investor excitement about artificial intelligence.

It is not unusual for a handful of firms to dominate the performance of the US stock market. The Seven together make up around 35% of the total market capitalisation of the S&P 500 index. The last time a small group of companies was so dominant was in the final years of the 1990s, which ended with the bursting of the dotcom bubble. Investors are increasingly debating whether history will soon repeat itself, or if there is something different about AI that will allow the winners to increasingly pull away from the rest.

Membership of the elite group has changed over time. In 2013, it was FANG (Facebook, Amazon, Netflix, Google), then FAANG (with Apple added) in 2017, and in 2021, MAMAA (Meta, Alphabet, Microsoft, Amazon, Apple). But with Nvidia’s shares up 28% so far this year, Microsoft’s up 20% and Meta’s 19%, while the other four firms are flat or down, maybe a new name will be needed soon for the three remaining AI superstars.

Photograph by I-Hwa Cheng, AFP/Getty