The "Seven Sisters" have become the "Big Four"! Tesla is the most left behind

The "seven sisters" of technology stocks (Apple, Microsoft, Google's parent company alphabet, Amazon, Nvidia, Tesla, Meta) are diverging, are U.S. stocks going to rise?

In particular, Tesla, whose stock price has fallen to the bottom, is going to lose the "Seven Sisters"? Who will be its replacement?

"Seven Sisters" Becomes "Big Four"

Since the beginning of this year, last year's strong "Technology Seven Sisters" are becoming the "Big Four of Technology", Microsoft's market value has surpassed Apple's, Amazon's market value has surpassed Google's, Meta's highlight moment, Nvidia has gone all the way up, and Tesla's stock price has continued to fall "the most backward".

On a weekly basis, individual stock trends have also begun to diverge. A total of five tech giants announced their earnings this week, of which only two companies, Meta and Amazon, continued to rise after their stock prices and achieved cumulative gains this week, while the other three Apple, Google, and Microsoft turned down.

Specifically:

Microsoft's cloud business grew less than expected, and its stock price fell 1.6% after the results, and the overnight erased the decline and rose 1.8%;

Google's fourth-quarter advertising revenue of $65.5 billion, less than analysts' expectations of $65.8 billion, caused market concerns, and there is also a view that Google's earnings report may reveal the risk of lagging behind Microsoft, the stock price fell 6.7%, and the stock price fluctuated overnight, closing up 0.58%, down 3.4% for the week;

After announcing a 25% jump in fourth-quarter revenue to hit the highest growth rate in a single quarter, plans to repurchase $50 billion in shares, and paid dividends for the first time in the company's history, Meta rose more than 20% in early trading, and its intraday market value soared by about $200 billion, the largest increase in stock market value in the history of U.S. stocks, surpassing the market value gains of Apple and Amazon in 2022 of $190 billion.

Fourth-quarter results and first-quarter guidance were stronger than expected, with Amazon rising strongly after results;

For the first time in a year, quarterly revenue growth was positive, but sales in the Chinese market fell 13%, executive guidance hinted at weak iPhone sales in the first quarter, and Apple's earnings report fell more than 5% after hours on the day of its release, opening low and high overnight, and erasing a decline of more than 4% in intraday trading.

However, despite the mixed market response, almost all of the sales and earnings reported by the five tech giants showed strong growth. Media data shows that quarterly revenues of the five companies increased by an average of 15%, totaling nearly $500 billion.

U.S. stocks are "getting narrower and narrower"

Nvidia, which will report its latest results later this month, has soared 34% so far this year, while Tesla has fallen 24% so far this year after reporting a weaker-than-expected fourth-quarter report and warning of a slowdown in growth this year.

So far, the collective rally of the "Seven Sisters" of U.S. stocks based on the artificial intelligence boom has been broken.

State Street Global Markets的策略师Anthi Tsouvali表示：

"We're starting to see the divergence of the seven sisters in tech stocks, and who knows? By the end of this year, we may see the 'four sisters' or even the 'three sisters' in tech stocks. ”

"The aura of the 'Seven Sisters' in tech stocks isn't going to fall anytime soon, [but] they won't do as well in 2024 as they did last year. ”

Technology stocks have been on the way so far this year, contributing most of the gains to U.S. stocks: The Seven Sisters accounted for 45% of the S&P 500's return in January, and the group's market capitalization now stands at $12.5 trillion, surpassing the GDP of major cities like New York and Tokyo.

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

JPMorgan Chase bluntly said that the rise of the market now relies on a few super heavyweight stocks, similar to the technology bubble:

At present, the valuations of the US tech giants are too high, and the market gains rely on a few super-weighted stocks, catalyzed by the uncertain macro-financial environment and other factors, once these few stocks fall sharply, the market will also be volatile.

Jon Wolfenbarger, a former investment banker at Merrill Lynch and JPMorgan Chase, believes that the current era of "tech bubble 2.0" is currently underway, and (the "seven sisters" of technology stocks), last year's market savior, may be a stumbling block to the future market:

"For those of you who are younger than us and didn't experience the tech bubble of the late 90s of the 20th century, you are now experiencing the tech bubble 2.0...... At that time, the Nasdaq was down about 80%. ”

"Considering that stock market valuations are now higher than they were in 2000, a similar plunge can be expected in the coming recession. ”

This view is also supported by the forecasts of Bloomberg analysts. Bloomberg noted that the Big Seven's profits are expected to grow at an average annual rate of 14% over the next three to five years, which is 4 percentage points higher than the expected growth rate of the S&P 500, due to the dominance of the Seven Sisters in various sectors such as e-commerce, cloud computing and electronics.

In addition, from the perspective of the overall situation of the market, the signs of rising concentration in the head and the market "getting narrower and narrower" are also very significant.

Relevant data shows that 271 stocks rose and 231 stocks fell in the market this week, and the stock funds of large exchanges such as Invesco S&P 500 Equal Weight ETF were flat, and the market situation can be called light.

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

So, if tech stocks don't collectively regain their momentum, there is still a risk of a correction in equities even as S&P 500 trading volume continues to approach all-time highs.

Tesla is lagging behind, who will "take the baton"?

Tesla's status as one of Tesla's "seven sisters" is in jeopardy, and Wall Street is already debating who will "replace" it.

Brandon Michael, senior investment analyst at ABC Funds, said:

"Now there are only the 'six sisters' of technology stocks. ”

Tesla faces competition from Chinese EV makers, price cuts, shrinking margins, and even Musk himself says the Dojo supercomputer is a distant target. ”

More than a dozen traders told the media that Tesla's next "baton" is likely to be "a company that has successfully monetized the momentum of the AI boom".

American communications chip giant Broadcom is a popular option.

Benefiting from the continuous fermentation of the concept of artificial intelligence, Broadcom's market capitalization will double in 2023 and squeeze into the top 10 in the United States for the first time. Some traders are betting that its recently completed acquisition of cloud computing company VMware could also give its share price a boost.

Last year, Broadcom's stellar performance led Wall Street analysts to believe that Broadcom was likely to be another company after Nvidia that benefited from the need for AI infrastructure.

According to Michael:

"If I had to pick the seventh, it would be Broadcom, a leader in custom chips that is driving the AI revolution. "

Another nominee is the American chip giant AMD, which is also Nvidia's main competitor, whose share price has jumped more than 2 times in the last year.

The latest earnings report showed that AMD's fourth-quarter revenue beat expectations, but the company's shares fell more than 6% after hours as its first-quarter guidance fell short of expectations.

Chris Beauchamp, chief market analyst at IG Group, believes that while AMD's market capitalization is nowhere near that of Tesla, it can "step up" because it will be a big beneficiary of the AI boom.

The more general view is that the tech "seven sisters" could be reduced to six members and become the tech "six sisters".

*This article does not constitute personal investment advice, does not represent the views of the platform, the market is risky, investment needs to be cautious, please make independent judgment and decision-making.