Eye-Popping Stats From The Market's Big Growth Stories

Mega-cap tech companies have been leading the stock market higher. AI investment has been driving economic growth. We hear about these storylines every single day in finance media.

Occasionally, some charts and stats cut through the noise and offer some killer context. Here are a couple that recently caught my eye.

The ‘Magnificent Seventy'?

Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta Platforms, and Tesla — the trillion-dollar companies collectively known as the "Magnificent Seven — account for about a third of the S&P 500's combined market capitalization.

This concentration among the largest companies makes some people nervous. Because what if one or more of these companies sees demand sour and investors dump the stocks?

My favorite counterargument to this concern is that these seven companies don't operate just seven businesses.

"They may go by the Magnificent Seven, but the truth is they act more like the Magnificent Seventy," Bloomberg's Eric Balchunas and Breanne Dougherty wrote. "Collectively, the Seven have acquired over 800 companies and expanded into a dizzying array of industries — effectively functioning as conglomerates of advanced technology, while still growing organically."

For the most part, the subsidiaries are tech-oriented or businesses leveraging a lot of tech.

Still, it is nearly impossible to find a household or business that isn't regularly using multiple goods or services offered by at least a few of these names.

"Viewed this way — as dozens of companies within each one — concerns about their record 33% weighting in the S&P 500 miss the point: the index may still be as diversified as ever," Balchunas and Daugherty added.

For more on this discussion, read: The FAAMGs are more than just five stocks  and The biggest stocks in the market are massive for a reason 

AI investment is officially the dominant growth story 🤖

AI has been a hot story for about three years. And the buzz only seems to be heating up.

Check out this chart from Luke Kawa at Sherwood News. It tracks analysts' estimates for AI capex by the major hyperscalers: Microsoft, Alphabet, Amazon, Meta, and Oracle. The curve suggests the investment spending is accelerating.

And just how big is the AI capex story in the context of the economy?

Renaissance Macro's Neil Dutta caught this incredible development in the most recent GDP report.

"So far this year, AI capex, which we define as information processing equipment plus software, has added more to GDP growth than consumers’ spending," Dutta said.

What's so impressive about this is how small AI capex is in the context of the economy.

"The U.S. consumer makes up about 70% of the economy," Sherwood's Kawa noted about the stats. "Over the long term, that's been the undisputed engine of growth. But these two segments that make up 6% of GDP have been playing a bigger role in fueling the expansion so far this year, on average."

In other words, a relatively small slice of the economy is growing so fast that it's become the dominant growth story for the whole economy.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.