The rise in the US stock market has become more concentrated, but the leaders have changed: Berkshire Hathaway, Eli Lilly, and AMD have replaced Tesla, Apple, and Alphabet-C.

The overall upward trend of the US stock market has become more concentrated this year, but the "Big Seven" stocks have shown a divergence, with Berkshire Hathaway, Eli Lilly, and AMD replacing the underperforming three companies.

According to media reports on Sunday, the concentration of the US stock market's upward trend is even stronger than in 2023. Compared with the 4% increase in the Pro UltrPro Shrt S&Pro 500, the equal-weighted version of the Pro UltrPro Shrt S&Pro 500 only rose by 0.2%. Last year, the top seven companies contributed about 60% of the market's gains, but so far this year, 80% of the market's returns have come from them.

Michael Grant, Chief Investment Officer at Calamos Investments, said:

You will see further divergence among large-cap stocks, and apart from these companies, the overall earnings prospects for the stock market are dim.

Related data shows that this week, 271 stocks rose and 231 stocks fell in the market. Looking at the annual data, half of the stocks in the Pro UltrPro Shrt S&Pro 500 have fallen over the past year.

At the same time, as the market focus shifts from AI speculation to concrete results, the giants are gradually diverging, with Apple, Tesla, and Alphabet-C falling behind and being replaced by Eli Lilly, Berkshire Hathaway, and their competitor AMD.

Reshuffling of the Top Seven Giants in the US Stock Market

With the release of the latest earnings reports, the collective upward trend of the "Big Seven" stocks (Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, Meta) based on the AI boom has been broken, and the gap between the giants has gradually widened.

Four of the seven stocks continue to outperform the market, but Alphabet-C lags behind the market. Tesla and Apple have become the biggest drag on the market. The latest earnings report shows that Apple's sales in China unexpectedly weakened, while Tesla has been hit by a slowdown in growth.

In this changing situation, Berkshire Hathaway and the "weight-loss drug" manufacturer Eli Lilly have surpassed Tesla in market value.

Based on strong market demand for new weight-loss drugs, Eli Lilly's stock price has performed well, nearly doubling in the past year. This also highlights that besides artificial intelligence, there are other themes that have sparked investors' enthusiasm.Analysis suggests that the hope of interest rate cuts due to declining inflation has driven a widespread rebound in the US stock market at the end of last year. However, in recent weeks, investors have been lowering their expectations for interest rate cuts.

Lower interest rates can increase investors' valuation of stocks. It is expected that the Federal Reserve will still begin cutting interest rates later this year. However, as most of the positive impact of interest rate cuts has already been priced into the stock market, most investors believe that the price-to-earnings ratio will not further increase. This increases the importance of earnings in driving stock price growth.

Vishal Vivek, a strategist at Citigroup's stock trading department, said:

As we enter earnings season, investors are already very bullish on some large-cap stocks. Therefore, the threshold for outperforming the market is higher, and companies need to provide additional positive news to gain favor from investors and drive stock price growth.