Stock prices of the six biggest tech companies in the US - Microsoft, Apple, Nvidia, Amazon, Meta, and Alphabet - rallied 140% since the beginning of 20231. This vastly outpaced returns of the wider S&P 500 and, indeed, equity indices everywhere. The share prices of these enterprises have been driven by the broad theme of Artificial Intelligence (AI). Can they possibly live up to all the hype this rally suggests?

For the time being, it appears they can. Consider semiconductor and AI chip manufacturer Nvidia: since January 20232, the company’s profits have jumped almost five-fold3 and the stock has rallied 450%, an incredible performance by any standard. Yet, Nvidia’s most recent quarterly results still managed to exceed analysts’ expectations for growth. Will it be able to maintain this pace going forward?

Fertile grounds

The US have been at the vanguard of the race to tech superiority, beginning with the release of ChatGPT, which brought the AI to the mainstream in late 2022. The competition from other countries is not even close, and it’s no coincidence either. The US is uniquely positioned to take advantage of this new technological paradigm.

Consider that the US fosters an environment for innovative business ideas to flourish. US capital markets are deep, the regulatory environment is accommodative, and investors’ risk appetites are immense – all going some way to explain why investment in AI is so much higher in the US than in Europe.

The Inflation Reduction Act and CHIPS3 Act implemented by the US Congress has also helped, pumping an aggregate $1.3 trillion into initiatives related to technology and green technology infrastructure or semiconductor production4.

American players are on the forefront of digital infrastructure, providing data centres, compute resources and processing frameworks for local and international innovators. This position is likely to solidify further given ongoing geopolitical tensions: economies such as China may have the resources and expertise to build similar infrastructure and end-user services, but will struggle to export them to Western clients in the current environment.

Big tech prospects

In this fertile environment, American tech behemoths have established themselves as natural monopolies or at least oligopolies of the modern age, stemming from the network effects of their core products. At face value, each company is synonymous with the primary function of their respective most popular products: Apple for mobile phones, Microsoft for computer operating systems, and Amazon for online shopping. Take a closer look, and you’ll find that they have implicitly or explicitly taken market share from previously unrelated industries: how many iPhone users no longer buy cameras, GPS, or indeed a new PC because their smartphone already satisfies those needs? Capturing this utility enabled Apple to steadily raise their prices, and indeed iPhone sales make up half of the company’s revenues these days.

New, emerging technologies such as AI and virtual reality hardware might enable giants like Apple to push the boundaries even further in ways that we may not yet understand. With their devices already in your pocket, these companies might be able to push into professional services (e.g., personal assistance or copywriting), education (e.g., tutoring), or entertainment (e.g., sports broadcasting). Care for a virtual courtside seat at the Lakers? Apple has you covered.

What’s more, Amazon, Microsoft, and Nvidia will be vital to innovators around the world, offering infrastructure and expertise to realise others’ AI projects. Barriers to entry are high for these kinds of modern utility services, likely providing the companies with windfall profits for years to come and providing them with capital to make strategic investments to foster their market-leading positions going forward.

A case for US indices

Whether the tech behemoths will be able to continue to capitalise on these opportunities and, more importantly, deliver on investors’ sky-high expectations, remains to be seen. Generally, identifying winners in the tech space is easier said than done and, amidst startup failure rates of up to 80%, diversification is key5. But the wider swath of US equities remains a fertile breeding ground for innovative companies to take advantage of AI and other newly emerging technologies, and the biggest players don’t seem to be going anywhere anytime soon.

Accompanying our digital document, please click on the video below to watch Thomas Gehlen, our Senior Market Strategist, explore long-term investment opportunities in more detail. 


1 Bloomberg
2 Bloomberg
3 CHIPS is an abbreviation of “Creating Helpful Incentives to Produce Semiconductors”
4 Source: US Department of Commerce
5 SPD Load,


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