By the end of 2024, the combined market capitalisation of the ten largest tech companies in the world hit $20tn, worth more than Shanghai Stock Exchange, Euronext, and LSE Group market capitalisations combined.
Big tech firms, led by Silicon Valley giants, have significantly outpaced the rest of the market in 2024, although some of their gains can be attributed to Wall Street’s strong overall performance. These companies now account for a greater share of the US stock market than ever before.
AI adoption is believed to be the driving force behind their soaring stock prices. In the case of Nvidia, the AI boom has contributed to annual revenue growth of 126% in 2024 and a 177% increase in market capitalisation.
Big Tech's dominance proves Silicon Valley’s enduring appeal, yet in its November Financial Stability Review, the European Central Bank (ECB) warned that this concentration “raises concerns about the possibility of an AI-related asset price bubble”.
Entering 2025, can the firms' earnings keep pace with share prices, pushed speculatively up based on assumptions? If not, will the markets get wind? Watch this space.
