The US tech sector is now worth more than the entire European stock market, Bank of America says
tech stockshave overtaken the entire European stock marketin market value as investors crowd into mega-caps to ride out the coronavirus pandemic.
- The tech sector is now worth $9.1 trillion, Bank of America said Thursday, while European stocks — including those in the UK and Switzerland — are worth a collective $8.9 trillion.
- The five largest US tech stocks — Apple, Microsoft, Alphabet, Amazon, and Facebook — are worth a collective $7.5 trillion and make up nearly 24% of the S&P 500.
Amazonhas jumped the most in 2020 so far, while Alphabet's Class A shares have gained the least.
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US tech stocks surpassed the entire European stock market in market value after surging through the summer on outsize investor interest, Bank of America said in a note to clients.
The sector has notched several extraordinary superlatives through the coronavirus pandemic. Tech names fueled the US market's rapid leap out of bearish territory and now host historically high investor crowding. Most recently, the group drove the S&P 500 to a record high, while the US remains deep in an economic slump and economists fear a double-dip recession.
Tech stocks' market cap totaled $9.1 trillion as of Thursday,
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To emphasize the speed at which tech stocks have grown, the bank noted that Europe's market cap in 2007 was roughly four times the size of the sector.
Much of that value is concentrated in the top five tech giants: Apple, Microsoft, Alphabet, Amazon, and Facebook. Together the companies make up nearly 24% of the S&P 500 and are worth roughly $7.5 trillion.
Investors largely shifted capital into tech giants at the start of the pandemic, betting that the mega-caps' cash piles and insulation from widespread lockdowns would outperform the market. Some strategists have deemed the names overcrowded, and others say they fear that antitrust measures could erode the companies' success. But that hasn't stopped the sector from continuing its run-up through the summer.
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Of the five giants, Amazon has surged the most through the year. The stock is up roughly 85% in 2020, thriving on a surge of online retail activity as Americans stayed at home.
Alphabet's Class A shares are up the least year-to-date compared with its mega-cap peers. Still, the shares have gained roughly 22% in 2020 and more than 7% over just the past month.
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