Mega-Cap Rally Brings Alphabet Back Near $1 Trillion Value

The thirteen-digit club is about to re-welcome an old member.

A massive rally in the biggest U.S. stocks this year has cemented their dominance on Wall Street, with three companies trading with market capitalizations that surpass $1 trillion, and a fourth just a hair away from returning above that threshold.

Apple Inc. recently retained its status as the largest U.S. stock, and after a 60%-plus rally since March currently trades with a record valuation of about $1.6 trillion. Microsoft Corp. isn’t far behind, having hurdled above a $1.5 trillion value in the wake of a 50% climb since March.

Both have benefited from the view that they are well insulated from economic headwinds related to the pandemic, with Microsoft seeing strong demand for its cloud-computing business and Teams product, which has gained in popularity as more people work remotely. Rising Apple optimism has come on its services business and strong sales for wearable products, and analysts are increasingly looking ahead to the launch of a 5G iPhone later this year.

Amazon.com Inc. -- the third-largest U.S. stock with a valuation of nearly $1.4 trillion -- has climbed more than 60% since a low earlier this year, amid soaring e-commerce demand as the pandemic shut many brick-and-mortar retailers.

While stocks have been broadly higher over the past several weeks, the gains have been concentrated among the biggest names, which hold the most weight in major indexes. The Nasdaq 100 is up more than 17% this year, while the S&P 500 is down 2.5%. Since mid-March, the Nasdaq 100 is up almost 50%, compared with am almost 40% gain for the S&P.

The rally has returned Google-parent Alphabet Inc. near a $1 trillion valuation, as it recovered from concerns over the impact that economic weakness would have on pricing for digital ads. Alphabet has risen almost 40% from a March low, resulting in a market cap of $997 billion. The stock, which traded above a $1 trillion valuation earlier this year, remains about 4% below record levels.

Volatility in the market has repeatedly scrambled the list of Wall Street’s biggest stocks, and names have repeatedly moved back and forth across the trillion-dollar threshold. Apple briefly dipped below the level in March, while Amazon returned above it in April. Microsoft currently has the longest tenure, having held a $1 trillion valuation for a little more than a year.

Mega-Cap Rally Brings Alphabet Back Near $1 Trillion Value

At current levels, the trio of Apple, Microsoft and Amazon together account for more than 16% of the S&P 500. Alphabet accounts for another 3.3% of the benchmark index, according to data compiled by Bloomberg.

The four names in or near the trillion-dollar club are unlikely to welcome new members anytime soon. The next largest stock on Wall Street is Facebook Inc., which has a valuation below $700 billion. Globally, however, the list also includes Saudi Aramco, Saudi Arabia’s national oil company, which currently has a market cap of about $1.75 trillion.

©2020 Bloomberg L.P.

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