In the not-too-distant past, FAANG was the acronym that ruled the American technology market. Facebook (Meta), Amazon, Apple, Netflix and Google (Alphabet) were the best-performing tech stocks in the market.
Now, the investment landscape has changed. Netflix has dropped out, and seven companies now hold the market in their hand. Meta, Amazon, Apple and Alphabet joined by Microsoft, Tesla and Nvidia now account 17.2 percent of the MSCI All Country World Index, a yardstick used to track global market performance.
These seven companies together have risen 74 percent in value during 2023, making the US dominant in the ACWI by accounting for nearly 63 percent of the chart. Apple, which is the largest company in the world, has a market cap of $2.97 trillion, which is larger than the entire US stock market on its own.
The Super Seven
A large part of this huge boom is Artificial Intelligence (AI), which has become mainstream in 2023 with big releases from OpenAI, Google and Microsoft. Yet, there was one company that benefitted the most from this big AI boom and that was Nvidia.
Nvidia's prowess with AI chips, which are required to power AI, helped them rake in the cash. Nvidia's stocks rose as high as 196 percent by September and reached a capitalisation of $1 trillion. On top of that, it still holds more than 80 percent of the market in discreet GPUs, outselling both AMD and Intel.
The company's data centre business fueled by orders from the biggest names in technology has grown from $300 million in annual revenue to $15 billion in 2023.
Tesla saw its share price increase by 158 percent, firmly establishing itself as the leading producer of electric cars. As the industry slowly moves to phase out diesel and petrol engines, Tesla will be the biggest benefactor, having played a huge part in establishing this market.
Meta, the parent company of Facebook, Instagram and WhatsApp, saw its shares increase in the first six months to 129.29 percent. Meta has already signalled its intent for AI with models like Llama 2 and is expected to play a big part in the upcoming AR/VR push. While not mainstream, VR worked itself into more homes in 2023, and there are no signs of that stopping in 2024.
Despite early setbacks with its Generative AI offerings, Alphabet's market value remained strong, with a new offering in Gemini poised for 2024. If the new model competes favourably with OpenAI's GPT-4, it could be a big push for the company.
Alphabet still holds over 80 percent of the market share in search engines, along with lucrative growth in crowd services and strong membership numbers from platforms like YouTube. Overall, the company owns nine popular platforms with more than 1 billion users.
The company still holds a 25 percent market share in the digital ad market, and it posted revenue gains of 11 percent YoY beating analyst forecasts.
Arguably the most influential company in the field of AI, and closely allied with OpenAI, Microsoft is betting big on the company and its founder, Sam Altman. Microsoft's shares soared to a record high when it was announced that Altman would be joining the company, during the brief turmoil at OpenAI this year.
Even if that didn't turn out to be the case, as Altman joined OpenAI again, Microsoft's destiny is now linked with AI advancements that OpenAI make. Microsoft earned a record $211 billion in revenue and over $88 billion in operating income for the fiscal year 2023.
Apple's market cap closed at almost $3 trillion this year, which is an all-time high for the company. The company's stock rose 48 percent in the year. Next year, the technology giant is set to wade into VR/AR waters with Vision Pro, the headset it announced this year.
Amazon closed with a market cap of $1.59 trillion, increasing its stock value by 76.87 percent in one year. Its primary business remains delivery, and according to internal projections seen by The Wall Street Journal, it will deliver an estimated 5.9 billion packages in the US alone.
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