Mega-Cap Titans Apple & Nvidia Fuel Market Rally: S&P 500 Jumps 2.4%, Nasdaq Soars 3.7% in Just One Week
Tech heavyweights flex their muscles as markets surge—again.
Another week, another mega-cap-powered market rally. The S&P 500 and Nasdaq 100 ripped higher last week, climbing 2.4% and 3.7% respectively. No prizes for guessing who led the charge.
Apple and Nvidia: The usual suspects.
These trillion-dollar titans continue to dominate market movements—because why diversify when you can ride the same few horses? Meanwhile, passive index investors cheer while active managers tear their hair out. Some things never change.
The takeaway? In today's market, you either bet on the tech oligarchy or get left behind. Just don't act surprised when the next correction comes.
Big gains at the top hide deep losses below
While the indexes showed strength, sharp drops hit several companies. Twelve S&P 500 names fell more than 10% last week, most on disappointing earnings or outlooks. Eli Lilly lost 18%, ON Semiconductor dropped 16%, and Trade Desk plunged 37%.
Bank of America reported that companies missing both revenue and earnings have seen stock declines over triple the 25-year average. The market’s rapid four-month climb has stretched valuations, leaving stocks exposed when results fall short.
Even so, the S&P 500 has held just under 6,400, well above key support NEAR 6,150, matching February’s peak and its 50-day moving average. Beneath the surface, a handful of companies dominate the gains.
Nvidia now makes up 8.2% of the S&P 500, the largest share for any single stock since at least 1981, and is likely the most expensive top index component in history by price-to-earnings ratio. Todd Sohn, ETF strategist at Strategas Research, noted its weight is nearly equal to the entire healthcare sector.
Six companies now account for a third of the index, while the top ten make up about 40%. AI-related growth is the main driver, with capital spending in the sector becoming a key contributor to GDP.
The largest companies are responsible for nearly all earnings outperformance, with the equal-weighted S&P 500 lagging the market-cap version by seven percentage points annually over the past three years; 9.5% compared to 16.9%. Krishna compared the situation to “overdoing one of those max-protein diets,” where too much concentration could create risks.
Valuations climb as AI leaders dominate
The Nasdaq 100 now trades near 28 times next year’s forecast earnings, a level topped only during the pandemic rally in the past two decades. Some valuations have created unusual comparisons: Johnson & Johnson and Palantir Technologies are now worth roughly the same, at around $420–$440 billion.
Johnson & Johnson’s market value is backed by $93 billion in expected 2025 revenue, $26 billion in net income, a 3% dividend yield, and one of only two triple-A credit ratings left in the market, with 4% projected growth next year.
Palantir’s valuation sits at $4.1 billion in 2024 revenue and $1.6 billion in net income, though it runs one of the fastest-growing and most profitable software operations in years, with DEEP government ties and strong retail investor demand.
The biggest players in the AI sector, both on the hyperscaler and hardware side, are benefiting together. Microsoft and Meta are spending most of their free cash flow on data centers supplied by companies like Nvidia. This leaves less cash cushion for the buyers, but strengthens the top supplier.
Defensive and value stocks have almost no demand. Cyclical stocks are outperforming defensives, a pattern that tends to happen when recession risk looks low.
For staples to see major gains, recession chances WOULD need to rise, and interest rates would have to fall. The value rebound of 1999 came mostly from expensive growth stocks crashing, not from cheap stocks soaring, and today’s setup is not yet that extreme.
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