Tech Giants Drive Markets But Raise Concerns About Diversification, Jobs, and Economic Inequality
• The "Trillionaire" tech companies (Apple, Amazon, etc) added over $5 trillion to the S&P 500's market cap in 2023, accounting for nearly 65% of the index's annual gains
• These companies ended the S&P 500's earnings recession in 2023 and saved profit margins from declining along with inflation
• Their outsized influence raises questions about the diversification thesis behind index funds
• There could be short-term pain if their margins get squeezed amid high hopes for AI profits
• Their automation efforts raise existential questions about their impact on jobs and whether we want the economy to reflect these companies