NVDA impact on market sentiment now likely past peak - over the last year, Nvidia and tech at large were uniquely driving earnings recovery in US large caps, but this set to change, making outcomes for the S&P 500 less dependent on the company or the tech sector.
Utilities outperformance over the last three months was not just a U.S. phenomenon - leadership crossed the globe as low beta, high rate sensitivity and its unique tie to AI investment all propelled the group.
Large cap tech stocks multiple is only about half the peak during the internet-inflated bubble 24 years ago, in part because earnings are much stronger. Some 54.8% of tech companies in March 2000 had a trailing 12-month EPS of less than $1 -- well beyond the 4.6% now.
Market distortions from high market cap stocks’ gains are global. Of all the major markets we follow, only India stands out with a median equity return similar to its index level return this quarter.
With the exception of China, global earnings revision momentum returned to positive levels for the first time since March 2022 after the 1Q reporting season.