In recent years, the stock market has seen a distinct trend in the form of mega cap names. A mega cap name is a stock whose market capitalization is higher than $200 billion. These large companies have come to dominate much of the stock market, and their influence and success have been unprecedented.
At the head of the pack are tech giants such as Apple, Microsoft, Amazon, and Google. These companies are the major contributors when it comes to market capitalization. Apple is the largest with a current market cap of over $2 trillion. Microsoft’s market cap is close behind at $1.3 trillion, followed by Amazon and Google at $1.2 trillion and $874 billion, respectively.
These four tech giants have grown at a rapid pace in recent years and have put themselves at the foremost position in the market. Consequently, they have come to account for nearly 23 percent of the entire US stock market.
This trend has been fueled by a few key factors. For one, their sheer size makes them difficult to displace. Second, these companies have established multiple sources of revenue. For example, Apple has its iPhones, iPads, and Macs, as well as Apple Music and other digital services. Microsoft has its Windows operating system and Office suite. Amazon and Google have their platforms for online shopping and search. Additionally, these companies have improved their efficiency over time, making them attractive to investors.
Lastly, the success of these mega cap names has led to a concentration of wealth in the stock market. As these companies remain strong, traditional investors and public shareholders are seeing their profitability diminish. This has caused a divide between the haves and have-nots, with investors with significant portfolios enjoying most of the benefits.
Mega cap names have become a powerful part of our markets today. They may represent a significant portion of the stock market, but they should not be allowed to dominate it without proper oversight. It’s important that their success is managed responsibly to ensure the health and stability of our markets for the long term.