---
title: "\"Big Tech Four\" instead of \"Big Tech Seven\"! Why is the US stock market getting narrower as it rises?"
type: "News"
locale: "zh-HK"
url: "https://longbridge.com/zh-HK/news/107355847.md"
description: "As the giants gradually diverge, by the end of this year, the \"Seven Sisters\" of technology stocks may become the \"Four Sisters\" or even the \"Three Sisters\". Is the US stock market unable to rise anymore?"
datetime: "2024-02-04T02:12:57.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/107355847.md)
  - [en](https://longbridge.com/en/news/107355847.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/107355847.md)
---

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# "Big Tech Four" instead of "Big Tech Seven"! Why is the US stock market getting narrower as it rises?

Tech stocks "The Seven Sisters" have divergent trends. Is the US stock market running out of steam?

Despite the unexpected surge in employment data, SPDR S&P 500 and Nasdaq continued to rise throughout the day under the strong support of tech giants, with both indices gaining over 1% for two consecutive days. By the end of Friday's trading session, SPDR S&P 500 and Dow Jones hit new all-time highs, while Nasdaq rose by 1.5%, marking its 13th consecutive weekly gain in the past 14 weeks.

Among them, driven by the hotly anticipated earnings reports, the tech stocks of "The Seven Sisters" reached new all-time highs this week, contributing to the overall market rally.

However, behind the crazy rally, individual stocks have shown divergent performances. This week, five tech giants released their earnings reports, with only Meta and Amazon continuing their upward momentum after the reports, achieving cumulative gains for the week. On the other hand, Apple, Alphabet-C, and Microsoft saw their stock prices decline.

Specifically:

Microsoft's cloud business growth was lower than expected, causing its stock price to drop by 1.6% after the earnings report. However, it rebounded by 1.8% overnight, erasing the losses.

Alphabet-C's fourth-quarter advertising revenue of $65.5 billion fell short of analysts' expectations of $65.8 billion, raising concerns in the market. Some believe that Alphabet-C's earnings report may indicate risks of lagging behind Microsoft. As a result, its stock price fell by 6.7%. However, it rebounded by 0.58% overnight and ended the week with a cumulative decline of 3.4%.

After announcing fourth-quarter revenue that exceeded expectations with a sharp increase of 25%, a plan to repurchase $50 billion worth of stocks, and the first-ever dividend distribution in the company's history, Meta's stock price soared by over 20% in early trading. Its market value surged by over $200 billion during the day, marking the largest increase in market value for a single stock in the history of the US stock market. This increase surpassed the market value gains of Apple and Amazon in 2022, which amounted to $190 billion. Fourth-quarter performance and first-quarter guidance are stronger than expected, with Amazon rising strongly after its earnings report.

For the first time in a year, quarterly revenue has grown positively, but sales in the Chinese market have declined by 13%, and executive guidance suggests weak iPhone sales in the first quarter. On the day of Apple's earnings report, the stock fell more than 5% after hours, but rebounded the next day and erased a decline of over 4% at one point.

However, despite mixed market reactions, almost all of the sales and profits announced by the five tech giants show strong growth. According to media data, the five companies' quarterly revenue grew by an average of 15%, totaling nearly $500 billion.

## "Narrowing Rise" in US Stocks

NVIDIA will announce its latest earnings later this month, and its stock price has already surged 34% this year. Tesla, on the other hand, released its earnings report earlier, showing weaker-than-expected fourth-quarter performance and warning of slower growth this year. Its stock price has fallen 24% year-to-date.

As a result, the collective rise of the "Magnificent Seven" in the US stock market (Apple, Microsoft, Alphabet-C parent company alphabet, Amazon, NVIDIA, Tesla, Meta) since the AI boom has been broken.

Anthi Tsouvali, a strategist at State Street Global Markets, said:

> "We are starting to see divergence among the tech giants. Who knows? By the end of this year, we might be looking at the 'Four Sisters' or even the 'Three Sisters' of tech stocks."
> 
> "The halo of the 'Magnificent Seven' in tech stocks won't fade quickly, but their performance in 2024 won't be as good as last year."

Tech stocks have been soaring this year, contributing to most of the gains in the US stock market. Data shows that the Mag-7 contributed 45% to the return of the SPDR S&P 500 Index in January. The group's market value currently stands at $12.5 trillion, surpassing the GDP of major cities such as New York and Tokyo.

This has raised concerns about a repeat of the "2000 dot-com bubble" crisis.

Major banks such as JPMorgan and Bank of America have issued warnings, comparing the concentration of today's large tech companies to the dot-com bubble twenty years ago and suggesting that their growth rates may not be sustainable. The Mag-7 rose 80% in 2023. And the average increase in individual stocks of SPDR S&P 500 is only 3%.

Bloomberg analysts' forecasts also support this view. Bloomberg pointed out that due to the dominant position of the Magnificent Seven in e-commerce, cloud computing, and electronics, it is expected that the profits of the seven giants will grow at an average annual rate of 14% in the next three to five years, which is 4 percentage points higher than the expected growth rate of the S&P 500 index.

In addition, from the overall market situation, there is a significant concentration of gains in the top, and there are signs of the market "narrowing".

Relevant data shows that this week there were 271 stocks that rose and 231 stocks that fell in the market. Large exchange-traded funds such as the Invesco S&P 500 Equal Weight ETF remained flat, indicating a sluggish market.

Looking at the annual data, half of the stocks in the SPDR S&P 500 index have fallen in the past year.

Therefore, if the technology stocks cannot collectively regain their dominance, even if the trading volume of SPDR S&P 500 is approaching historical highs, there is still a risk of a market correction.

## The overall market trend remains strong, and market confidence is high

However, despite the divergence in individual stock performance and the concentration of gains in the top stocks, the US stock market is still on an upward trend, and companies like Apple and Microsoft have also rebounded after their earnings reports, boosting the confidence of tech stock investors.

Just a week ago, the market's enthusiasm for tech stocks reached its peak. Data shows that as of last Friday, investors have injected new funds into the Invesco QQQ Trust (the largest ETF tracking the Nasdaq 100 index) for six consecutive weeks, the first time since April 2022.

According to Deutsche Bank data, investors have kept their positions in a narrow range since December last year, but last week they increased their overall stock positions to a six-month high.

Ankur Crawford, co-manager of the Alger Capital Appreciation Fund, said that valuation analysis is not very useful for long-term trends like artificial intelligence because the company's multi-fold growth takes several years or even decades to materialize.

Crawford said:

> "They are the leaders and pioneers of the next technological revolution. It is difficult to say that they are overhyped, especially when you look at the next two or three years."
> 
> "When you are at the beginning of a technological era, it will not show up within a year."

Although employment data shows the resilience of the labor market and Powell's remarks have dampened expectations of interest rate cuts, Bank of America pointed out that about 75% of investors still expect the US economy to achieve a soft landing, which, once achieved, will benefit the "breadth" of market gains, or in other words, more stocks will participate in the rise.

### 相關股票

- [Meta Platforms (META.US)](https://longbridge.com/zh-HK/quote/META.US.md)
- [Alphabet (GOOGL.US)](https://longbridge.com/zh-HK/quote/GOOGL.US.md)
- [Alphabet - C (GOOG.US)](https://longbridge.com/zh-HK/quote/GOOG.US.md)
- [Microsoft (MSFT.US)](https://longbridge.com/zh-HK/quote/MSFT.US.md)
- [Apple (AAPL.US)](https://longbridge.com/zh-HK/quote/AAPL.US.md)
- [Amazon (AMZN.US)](https://longbridge.com/zh-HK/quote/AMZN.US.md)
- [Tesla (TSLA.US)](https://longbridge.com/zh-HK/quote/TSLA.US.md)
- [NVIDIA (NVDA.US)](https://longbridge.com/zh-HK/quote/NVDA.US.md)

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