Zhi Tong Cai Jing·2025-05-19 00:22Core Viewpoint - The dominance of major tech companies in the U.S. stock market has declined in 2023, contrasting with their previous strong performance over the past decade, raising questions about their ability to regain leadership by the end of the year [1][5]. Group 1: Market Performance - The S&P 500 index has rebounded since 2025, but major tech stocks like Apple, Alphabet, Amazon, and Tesla are still experiencing declines [1]. - The "Magnificent Seven" index, which includes major tech firms, has underperformed compared to the S&P 500, marking the potential for the second consecutive year of such performance [1]. - In contrast to last year, when tech and telecom stocks surged over 35%, sectors like industrials, utilities, and financials are currently driving market rebounds [1]. Group 2: Investor Sentiment - Market focus is shifting towards individual stocks, financial strength, and innovation rather than trade uncertainties, with increasing purchases of large tech stocks despite their recent underperformance [4]. - Hedge funds have been rapidly buying U.S. stocks, particularly after the announcement of a delay in tariffs, leading to a 9.5% surge in the S&P 500 index [4]. Group 3: Risks and Challenges - Major tech stocks face significant risks due to their previous substantial gains, with a potential for larger declines as economic conditions evolve [5]. - Concerns persist regarding the impact of tariffs and trade policies on the tech sector, particularly with companies like Apple heavily reliant on Chinese manufacturing [7]. - Alphabet faces risks from AI developments, such as OpenAI's ChatGPT, which could threaten its search business [8]. Group 4: Market Dynamics - The S&P 500 index has shown resilience, indicating that a healthy market does not necessarily require the largest companies to lead the way [8]. - Some tech companies, like Meta and Microsoft, have performed better this year, with Meta up 9.4% and Microsoft up 7.8%, attributed to limited exposure to tariffs and better-than-expected earnings [6].