The year Big Tech leapfrogged the stock market
- Sara Fischer, author of Axios Media Trends
At about $11 trillion, the combined market value of the six most valuable American companies is now more than a quarter of the entire value of the S&P 500.
Why it matters: The stock price of most of these companies has roughly doubled in the past two years, pointing to the undeniable leverage they've had during the pandemic, as so many U.S. businesses shifted to digital operations.
- These companies' gains accelerated in the past year, as the pandemic's initial shock receded and businesses like e-commerce, gaming, cloud storage and digital advertising exploded.
The big picture: Alphabet becomes the third U.S. company to surpass a $2 trillion market cap, following Apple in 2020 and Microsoft earlier this year. Amazon is closing in, too.
Yes, but: Market capitalization is a metric that's built on market sentiment as much as business fundamentals, and can be vulnerable to big swings.
What to watch: Facebook, now called Meta, joined the $1 trillion club over the summer, but has since seen its value drop below the $1 trillion mark in response to changes to Apple's privacy policies and its recent coverage of a whistleblower's leaked reports documenting harms to users.