You’ve no doubt heard of the Magnificent Seven stocks driving most S&P 500 gains. But what about the world’s top 10 stocks?
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It turns out that three foreign stocks, including Taiwan Semiconductors Manufacturing (TSM), SAP (SAP) and AMSL Holdings (ASML) join the Magnificent Seven in accounting for 87% of the world’s stock returns this year, says data from Data Trek Research, S&P Global Market Intelligence and MarketSmith.
This highlights how even globally, just a tiny handful of stocks are driving most returns. “For reference, there are just over 2,300 stocks in the ACWI ETF which tracks this (MSCI All-Country World) index,” said Nicholas Colas of DataTrek.
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U.S. Stocks Still Dominate The Globe And S&P 500
Seeing a few stocks outside the U.S. contribute to global returns is interesting. But it important to point out that they’re a fraction of the power of the U.S.’ Magnificent Seven.
Taiwan Semi, SAP and ASML all together accounted for 3.1% of global returns. That’s only about a tenth of the contribution made by Nvidia (NVDA), the largest driver of stock values this year, DataTrek found.
That means the Magnificent Seven combined drove 84% of global returns. And that matches with what’s going on in U.S. markets. The Magnificent Seven drove 117.8% of the S&P 500’s total returns this year. In other words, the S&P 500 would be down on the year if not for the seven tech giants, DataTrek found.
Incidentally, these results are how global markets work long term. “Academic research shows that from 1990 to 2020 just 2.4% of U.S. listed companies generated all the stock market returns for that period,” Colas said.
Power Of AI In S&P 500
The pulling ahead of just a small group of stocks highlights how it’s the promise of AI that’s propping up the S&P 500, Colas says.
“The fact that almost all year-to-date global equity returns come from 10 companies with varying but clearly relevant links to Gen AI delivers a disturbing message: the economic payoffs of this novel technology will go to a handful of businesses,” Colas said.
Top World Return Contributors This Year
Based on MSCI All-Country World index (sorted by weight in index)
| Company | Symbol | Return contribution | Sector |
|---|---|---|---|
| Apple | (AAPL) | 14.0% | Information Technology |
| Microsoft | (MSFT) | 14.5% | Information Technology |
| Alphabet | (GOOGL) | 8.6% | Communication Services |
| Amazon.com | (AMZN) | 8.8% | Consumer Discretionary |
| Nvidia | (NVDA) | 22.2% | Information Technology |
| Meta Platforms | (META) | 10.7% | Communication Services |
| Tesla | (TSLA) | 5.5% | Consumer Discretionary |
| Taiwan Semiconductor Manufacturing Company Limited | (TSM) | 1.5% | Information Technology |
| SAP | (SAP) | 0.8% | Information Technology |
| ASML Holding | (ASML) | 0.7% | Information Technology |
Sources: DataTrek Research, S&P Global Market Intelligence, IBD
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