Can Big Tech stocks continue to lead the equities rally?

AS THE tech-heavy Nasdaq 100 continues to outpace the “old economy” sectors of the US and global economy through the first semester and the artificial intelligence-driven narrative gains steam, concerns over the sustainability of this outperformance are understandably widespread.

Fortunately for investors, the tech-led equity performance has been driven not by speculative valuation-led gains in markets. Instead, unlike in the run-up to the 1999 tech bubble, the rally in 2024 and over the past decade has been driven primarily by earnings. This effectively provides a fundamental driver to the gains realised by investors, in contrast to the speculative excesses of a generation ago.

In 2024 alone, earnings growth expectations of more than 20 per cent have actually allowed valuations in the Nasdaq 100 to decline year to date and still deliver 10 per cent returns for investors.