The US tech sector is now worth more than the entire European stock market, Bank of America says
- US tech stocks have overtaken the entire European stock market in market value as investors continue crowding 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.
- Amazon has 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 entirety of the European stock market in market value after surging through the summer on outsized investor interest.
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 in its biggest names. Most recently, the group drove the S&P 500 to a record high, despite the US remaining deep in an economic slump and economists fearing a double-dip recession.
Tech stocks' market cap totaled $9.1 trillion as of Thursday, Bank of America said in a note to clients. That size leads it to, for the first time, dwarf the total value of all European stocks, including those listed in the UK and Switzerland, which stands at $8.9 trillion.
To emphasize the speed at which tech stocks have grown, the bank noted that, in 2007, Europe's market cap 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. Apple alone is valued at over $2 trillion.
Investors largely shifted capital into tech giants at the start of the pandemic, betting the mega-caps' cash piles and insulation from widespread lockdowns would outperform the market. Some strategists deem the names overcrowded, and others fear that future antitrust measures could erode the companies' success. Yet such warnings haven't stopped the sector from continuing its run-up through the summer.
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 to 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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