Nvidia has been a significant contributor to the recent stock market rally, outperforming the S&P 500 with a remarkable 62% increase in its stock value this year. This outperformance can be attributed to the role of artificial intelligence in driving growth and delivering better-than-expected earnings results.

Market Capitalization Impact

With a market capitalization nearing $2 trillion, Nvidia holds nearly 5% of the total market cap of the S&P 500. Companies with larger market caps, like Nvidia, have a more substantial influence on the index’s movements due to the index’s weighted price level by market cap.

Diversified Support for Market Gain

Despite Nvidia’s impressive performance, other stocks are also contributing significantly to the overall market gain. Only four of the S&P 500’s sectors have outperformed this year, namely tech, financials, healthcare, and communications services, collectively driving the market up alongside Nvidia.

Berkshire Hathaway Leading Financials

In the financial sector, Berkshire Hathaway has been at the forefront of the charge with a 20% increase in its stock value for the year. Warren Buffett’s company surpassed earnings estimates in the fourth quarter and has experienced robust profit growth fueled by rising investment income and book value. Additionally, Berkshire Hathaway’s strategic stock buybacks have bolstered earnings per share, further cementing its support for the market’s upward trajectory.

Healthcare Stocks on the Rise

Eli Lilly Surges Ahead

In the healthcare sector, Eli Lilly’s stock continues its impressive upward trend, boasting a remarkable 33% increase so far this year. With a market value exceeding $700 billion, the pharmaceutical company is anticipated to observe sustained growth in its weight-loss products. Equipped with abundant cash reserves, Eli Lilly persists in repurchasing stock, thereby fortifying double-digit annual growth in earnings per share for the foreseeable future, according to FactSet consensus estimates. Notably, the latest quarterly earnings report from Lilly has been robust, leading analysts to uplift profit forecasts for the current year.

Tech-Adjacent Communication Stocks Making Strides

Meta Platforms and Netflix Shine

While not classified as tech stocks, Meta Platforms and Netflix have shown significant growth this year, with gains of 37% and 20%, respectively. Together, these companies boast a combined market capitalization of approximately $1.5 trillion.

Meta Platforms: This conglomerate is primed to experience double-digit annual growth in earnings per share, leveraging artificial intelligence to enhance the appeal of its advertising solutions across the Facebook and Instagram platforms.

Non-Tech Sectors Demonstrating Resilience

Amidst the challenges faced by various non-tech industries this year, some sectors are thriving due to their long-term growth prospects, robust free cash flow, and solid balance sheets that enable substantial returns to shareholders. Consequently, owning shares in the S&P 500 appears to be a prudent decision.

According to Nicholas Colas from DataTreks, “A handful of names tend to drive overall market performance.” He further emphasizes that such leadership positions are common in bull markets and underscores the positive trend wherein two of the four key stocks driving sector outperformance are not tech-related—namely Lilly and Berkshire.

Rally On

Continue to rally forward, one step at a time. Remember to keep pushing towards your goals and dreams, no matter the obstacles in your way. Every effort you put in today will bring you closer to success tomorrow.


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