The driving force behind an overwhelming 87% of global stock gains this year lies in a select group of stocks known as the ‘Perfect 10.’ While the widely recognized Magnificent Seven stocks typically lead S&P 500 gains, it’s essential to shed light on the top 10 stocks influencing the world market.
Data sourced from Data Trek Research, S&P Global Market Intelligence, and MarketSmith reveals that three international stocks—Taiwan Semiconductors Manufacturing (TSM), SAP (SAP), and AMSL Holdings (ASML)—stand alongside the Magnificent Seven, collectively responsible for 87% of the world’s stock returns in the current year.
This statistic underscores the dominance of a handful of stocks in driving global returns, emphasizing Nicholas Colas’ observation from DataTrek, who notes that out of over 2,300 stocks in the ACWI ETF (tracking the MSCI All-Country World index), only a select few are significantly impacting returns.
While the inclusion of foreign stocks in the global returns narrative is noteworthy, it is crucial to recognize that their collective impact is a fraction of the influence exerted by the U.S. Magnificent Seven. Combined, Taiwan Semi, SAP, and ASML contribute a modest 3.1% to global returns, a mere tenth of the substantial contribution made by Nvidia (NVDA), the foremost driver of stock values this year.
In essence, the Magnificent Seven, including Nvidia, collectively propel 84% of global returns, mirroring their influence on U.S. markets where they account for 117.8% of the S&P 500’s total returns this year. Notably, without the contributions from these seven tech giants, the S&P 500 would have registered a negative performance for the year, according to DataTrek’s findings.
These trends align with the historical pattern observed in global markets, as highlighted by Nicholas Colas, where a small percentage of companies tend to generate the majority of stock market returns. Academic research spanning from 1990 to 2020 indicates that a mere 2.4% of U.S.-listed companies contributed to all stock market returns during that period.
The concentration of market influence in a select group of stocks is further underscored by the role of artificial intelligence (AI) in propping up the S&P 500. Colas emphasizes that the dominance of 10 companies, each with significant ties to Generation AI, sends a disconcerting message about the economic rewards of this emerging technology being concentrated in the hands of a limited number of businesses.
In summary, the ‘Perfect 10’ stocks, comprising the Magnificent Seven and three international counterparts, wield substantial influence, driving the lion’s share of global stock gains and emphasizing the pivotal role played by a select group of companies in shaping the trajectory of the world market.
Based on MSCI All-Country World index (sorted by weight in index)
Company Symbol Return contribution Sector Apple (AAPL) 14.0% Information Technology
Microsoft (MSFT) 14.5% Information Technology
Alphabet (GOOGL) 8.6% Communication Services
Amazon.com (AMZN) 8.8% Consumer Discretionary
Nvidia (NVDA) 22.2% Information Technology
Meta Platforms (META) 10.7% Communication Services
Tesla (TSLA) 5.5% Consumer Discretionary
Taiwan Semiconductor Manufacturing Company Limited (TSM) 1.5% Information Technology
SAP (SAP) 0.8% Information Technology
ASML Holding (ASML) 0.7% Information Technology
