US Stocks Led By Apple, Nvidia, And Other Tech Giants Dominate Nearly Two-Thirds Of MSCI World Index, Drawing Parallels To 1980s Peak

Author: Rishabh Mishra | December 18, 2024 05:53am

The U.S. has the world’s largest companies by market capitalization and about two-thirds of the MSCI World Index is dominated by companies based out of America.

What Happened: U.S.-based companies ranking among the world’s top ten firms by market capitalization include Apple Inc. (NASDAQ:AAPL), Microsoft Corp. (NASDAQ:MSFT), Nvidia Corp. (NASDAQ:NVDA), Amazon.com Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), Meta Platforms Inc. (NASDAQ:META), Tesla Inc. (NASDAQ:TSLA), and Broadcom Inc. (NASDAQ:AVGO).

These magnificent seven firms along with Broadcom are the beneficiaries of the U.S. tech and AI boom. The remaining two non-U.S. firms that make up the top ten include Saudi Arabian Oil Co and Taiwan Semiconductor Mfg Co Ltd (NYSE:TSMC).

According to an X post by Kevin Gordon, director and senior investment strategist at Charles Schwab, “Such an imbalance has not been seen since the late 1980s.” The data shared by him shows nine out of the top ten companies by market capitalization were based out of the U.S. in the 1980s.

"…the US, with 4% of the world's population, roughly a quarter of global GDP and a third of global profits, now accounts for more than two-thirds of the MSCI World index's capitalization. Such an imbalance has not been seen since the late 1980s…,” he said.

"…the US, with 4% of the world's population, roughly a quarter of global GDP and a third of global profits, now accounts for more than two-thirds of the MSCI World index's capitalization. Such an imbalance has not been seen since the late 1980s…"
⁦@Gavekal⁩ pic.twitter.com/OKO0XCPld5

— Kevin Gordon (@KevRGordon) December 16, 2024

Why It Matters: Additionally, the top ten constituents in the MSCI World index are U.S.-based firms. This index captures 1,397 large and mid-cap companies across 23 developed markets.

According to MSCI’s latest release, dated Nov. 29, the U.S. has a weightage of 73.92% in the index, followed by Japan with 5.23%, the United Kingdom with 3.44%, Canada with 3.1% and France with 2.5%.

The index has the highest exposure of 25.29% to information technology companies, followed by 16.3% to financial firms.

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