Strong fundamentals support further upside for Big Tech
Big Tech stocks’ valuations are backed by strong earnings growth. But the stock price surge may not be repeated in the second half of the year
THE strong rally in the technology sector this year was led by a small group of mega-cap stocks known as the “Magnificent Seven” (Microsoft, Apple, Nvidia, Amazon, Tesla, Meta, and Alphabet). Consequently, the combined weightage of these seven names accounted for 55.09 per cent of the Nasdaq 100 Index as at Jul 3, 2023 (taking into account both share classes of Alphabet).
Due to the over-concentration in the Nasdaq 100 Index, a special rebalancing was conducted to redistribute the weights.
Notably, after the rebalancing, the individual weighting for each of the “Magnificent Seven” has declined, while Broadcom has become a more important constituent in the Nasdaq 100 Index.
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