Apple Joins the 3 Trillion Club

In July 2023 Apple became the first $3 trillion company. Over the past 11 months the stock languished while earnings grew into their lofty valuation multiples. Now with tailwind of a massive $110 billion share repurchase program on the heels of $180 billion shares that were bought the previous couple of years, AAPL is once again established in the $3 trillion club. The Mag 3 also includes Microsoft and the up and comer Nvidia that appears poised to surpass them all. The leadership in this stock market continues to narrow, raising alarm bells for many who recall the dotcom mania of the late 1990’s. Artificial Intelligence (AI) tells us that a stock market that is increasingly dominated by fewer stocks becomes riskier. Of course, AI merely spits out what other humans have written without context or evidence. Often that information is incorrect. The Mag 6 stocks (MSFT,NVDA,AMZN,GOOGL,META,AAPL) have left the rest of their SP, Nasdaq and Dow family in the dust since the Bull market began in 2022. A recent study by SentimenTrader.com illustrates that mega cap growth stock outperformance is more often a positive sign about the ensuing 6 to 12 months. 

Most stocks outside of mega cap are where they were in February and March with poor growth prospects.

One should look for weakness in the $3 trillion club before assuming the market must have a major correction. Microsoft and Nvidia keep hitting new highs without significant pullbacks. Now, due to Buybacks and the major AI announcements this week, Apple has rejoined the uptrend with fresh record highs today. Suddenly all three market leaders are garnering forecasts targeting $4 trillion.

Record travel expenditures and AI related investments have kept the broader stock market from falling too far. The good news is that sentiment is neutral, and as long as interest rates don’t rise, stocks have plenty of room to run still higher before our expected summer consolidation arrives.

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