Source: Barron's Weekly Author: Ed Lin The second largest public retirement fund in the United States recently made significant adjustments to its stock investment portfolio listed in the United States. The California Teachers' Retirement Fund increased its investment in Chinese e-commerce company, pdd holdings (PDD.US), and bought more shares of Discover Financial Services (DFS.US) and Williams-Sonoma (WSM.US) in the first quarter, while reducing its holdings of American Airlines (AAL.US) stocks. The California Teachers' Retirement Fund disclosed this stock trading information in a report submitted to the Securities and Exchange Commission. "Our public equity investment portfolio uses both passive and active strategies," the California Teachers' Retirement Fund said in a statement responding to a review request. "The portfolio's positions may change for various reasons, including fund managers' realignments of the active or index weights they require, or as a result of corporate mergers, stock splits, name changes or similar company actions." As of April 30, the fund managed assets of about $332.5 billion, making it the second largest public pension fund in the United States in terms of assets under management.

On Wednesday, June 5th, the market cap first broke the $3 trillion mark. The stock price closed at $1224.40, a 5.16% increase from the previous day. On the same day, Apple's market cap returned to the $3 trillion mark, and its stock price closed at $195.87, an increase of 0.8%.$NVIDIA (NVDA.US)$Market cap surpassed 3 trillion dollars for the first time, with a 5.16% increase in stock price to $1224.40 on the day. On the same day,$Apple (AAPL.US)$Please use your Futubull account to access the feature.

Currently, the market caps of NVIDIA, Apple, and the S&P 500 Index are slightly higher than $3 trillion. The three big giants in the US business world are now all technology companies, rather than automotive or Detroit-based companies. These three technology companies now account for more than 20% of the total market cap of $44.4 trillion.$Microsoft (MSFT.US)$The market caps of Apple and Nvidia are both slightly higher than 3 trillion dollars, as of now the three giants of the US business sector are all technology companies instead of autos and Detroit.$S&P 500 Index (.SPX.US)$

It took NVIDIA only 66 trading days to rise from $2 trillion to $3 trillion.

NVIDIA is benefiting from the expectation of its next-generation AI chips. The executives of NVIDIA all said that NVIDIA is the most important supplier in the AI boom.$Tesla (TSLA.US)$ and $Hewlett Packard Enterprise (HPE.US)$

Last weekend, NVIDIA CEO Jensen Huang announced plans to release the Blackwell Ultra chip in 2025 and the next-generation Rubin platform in 2026. The news had a positive impact on NVIDIA's stock price in recent trading days and it reached a new closing high.

In the past year, NVIDIA's market cap has accelerated. It took NVIDIA nearly 25 years to break the $1 trillion mark in June last year and then broke the $2 trillion mark in March this year. It only took less than nine months, or 66 trading days, to soar from $2 trillion to $3 trillion this time, compared with the 719 trading days it took Apple to rise from $2 trillion to $3 trillion.

Changes in Nvidia's market cap

More signs indicate strong demand for NVIDIA chips in the market. Tesla CEO Musk revealed more details of plans to buy NVIDIA chips. According to CNBC, he has prioritized supplying his own social media company X and AI startup company xAI. Musk said on X that there is no place to use these chips when they are shipped. He expects Tesla to buy $3 billion to $4 billion worth of NVIDIA chips this year, about two-thirds of the cost of building its AI training infrastructure.

For the AI field, especially NVIDIA, another good news comes from HPE. The company mentioned the strong demand for AI servers using NVIDIA's current generation H100 chip in its financial report released on Tuesday.

On the earnings call, HPE CEO Antonio Neri was asked by analysts whether he expected NVIDIA's competitors to take a larger market share in the future. Neri said, "In the generative AI field, NVIDIA is the market leader. We buy NVIDIA's products. Some systems will appear in 2025, but now NVIDIA is our main supplier."

However, there are still many potential competitors who hope to have a share of NVIDIA's market. The latest emerging competitor is Taiwanese chip company Kneron, a AI chip startup that has received support. The company launched KNEO 330 on Wednesday, a new product that is different from cloud-based AI models, which are usually driven by energy-intensive NVIDIA chips.$Qualcomm (QCOM.US)$The supported AI chip startup launched KNEO 330 on Wednesday, which is different from cloud-based AI models usually driven by energy-intensive Nvidia chips.

As of Wednesday's close, Nvidia has risen 147% so far this year, slightly higher than the market caps of Apple and Nvidia, all three of which are now technology companies rather than autos and Detroit. These three technology companies currently occupy$Nasdaq Composite Index (.IXIC.US)$

WWDC is expected to bring great boost to Apple's stock price.

As the highly anticipated Worldwide Developers Conference (WWDC) is about to open next week, Apple's market cap rebounded to over 3 trillion US dollars on Wednesday.

Wall Street expects that Apple will use this opportunity to introduce the latest progress of generative artificial intelligence project. WWDC will be held from June 10 to 14.

Investors are waiting for major announcements. Apple has risen for nine consecutive trading days, the longest continuous rise since March 29, 2022, when Apple's stock price rose for 11 consecutive trading days.

Apple's closing price on Wednesday was the highest since December 19, 2023, when the stock closed at $196.94. On Wednesday, Apple rose as high as $196.90, according to Dow Jones Market Data. Apple was the fourth most active stock in the S&P 500 on Wednesday and the third most active stock in the Dow Jones Industrial Average, contributing 9.99 points.$NASDAQ 100 Index (.NDX.US)$Apple's market cap ranking:

Dan Ives, an analyst at Wedbush, wrote in a research report:"WWDC is the most important event for Apple in more than a decade." Investors had been disappointed that Apple had not announced any news on artificial intelligence.

Ives rates Apple's stock as "outperforming the market" with a target price of $275, and he wrote in a research report that WWDC could give Apple's stock a huge boost. Ives expects Apple to formally announce a partnership with OpenAI to add a large language model to its devices.

Ives wrote:"We also anticipate that iPhone 16 will include exclusive artificial intelligence functions, which will lay the foundation for the growth recovery, bringing a large-scale product upgrade cycle until 2025."

Atif Malik, an analyst with Citi, rates Apple's stock as "buy" with a target price of $210. In his research report, he wrote that Apple has a key advantage in data security, and as artificial intelligence becomes more popular, consumers will pay more attention to data security. Malik said:"Apple is known for valuing privacy." He expects Apple to spend time at WWDC talking about the company's efforts to protect data privacy.

Apple's stock price rose before the opening of WWDC, but if the stock price rises on the first day of the conference, it will break a historical trend. Dow Jones Market Data shows that over the past 10 years, Apple has averaged a 0.2% decline on the first day of WWDC.

US stocks have never been so highly concentrated in three stocks in the same industry.

Now it's time to say goodbye to$General Motors (GM.US)$, $Ford Motor (F.US)$, Chrysler or$Stellantis NV (STLA.US)$

For example, in 2008, the three companies - retail giant ‘XXX' and leading consumer goods company $Procter & Gamble(PG.US)$ – accounted for 10% of the total market cap of the S&P 500 Index. Even during the worst of the dot-com bubble in 1999, the top three stocks in the S&P 500 Index were only two technology companies, ‘XXX' and $Microsoft$, while General Electric (GE) was the third largest stock in the index. At that time, these three stocks accounted for 12% of the total market cap of the index. The highly concentrated phenomenon of the current stock market may indicate that these technology stocks are overvalued and they will eventually have to "come back to reality." The president of the fund supplier Pacer ETFs Distributors, who manages US$45 billion of assets, Sean O’Hara, said: "Although there are occasional situations when the market is led by very few stocks, it will never last."$Exxon Mobil (XOM.US)$The tech giants, including $Microsoft$ and $Apple$, which have risen far less than $Nvidia$ this year, are not cheap. Microsoft's expected P/E ratio is over 35 times and Apple's expected P/E ratio is close to 30 times. By comparison, the S&P 500 Index has an expected P/E ratio of 22 times.$Walmart (WMT.US)$Please use your Futubull account to access the feature.$Procter & Gamble (PG.US)$In 2008, these three companies - retail giant ‘XXX’ and leading consumer goods company $Procter & Gamble(PG.US)$ - accounted for 10% of the total market cap of the S&P 500 Index.

Even during the worst of the dot-com bubble in 1999, the top three stocks in the S&P 500 Index were only two technology companies, ‘XXX' and $Microsoft$, while General Electric (GE) was the third largest stock in the index. At that time, these three stocks accounted for 12% of the total market cap of the index.$Cisco (CSCO.US)$Currently, the highly concentrated phenomenon of the stock market may indicate that these technology stocks are overvalued and they will eventually have to "come back to reality."

The president of the fund supplier Pacer ETFs Distributors, who manages US$45 billion of assets, Sean O’Hara, said: "Although there are occasional situations when the market is led by very few stocks, it will never last."

$Nvidia$'s year-to-date gain has soared to 147.24%, and its expected P/E ratio is 45 times. Wall Street has been deeply attracted by the GPUs produced by Nvidia for AI systems, and the strong demand for these GPUs has driven Nvidia's revenue and profits to increase significantly, sparking a buying frenzy for the company's stock.

In recent weeks, Nvidia's stock price has accelerated as the company will split one share into ten shares by this weekend. Based on Wednesday's closing price, Nvidia's stock price will surpass $120 after the split on Monday. Although the split will not change Nvidia's market cap, it can make it easier for retail investors to buy the stock by lowering the price. In the case of Nvidia, the split will simply increase the number of shares outstanding by ten times while reducing the stock price to one-tenth of its pre-split level.

The rise of technology stocks, such as $Microsoft$ and $Apple$, which have increased by 12.76% and 1.73% respectively this year, is a major reason for the S&P 500 Index's dependence on technology stocks. Sean O'Hara of Pacer ETFs Distributors said to Barron's,"Nvidia is rising very fast and currently has a very high weight in the S&P 500 Index, which is very worrying."

As they have invested in OpenAI, which has created ChatGPT, both $Microsoft$ and $Nvidia$ have long been considered artificial intelligence stocks. $Apple$ has recently risen because investors hope that the company will eventually announce its own AI strategy, which may come at the Global Developer Conference opening on June 10th.

Some investors have already abandoned the "seven giants" of technology because they seem to think that Nvidia is the only winner in the AI field. But this may be a short-sighted approach. O'Hara believes that many other technology stocks will benefit from the explosive growth of demand for AI.

O'Hara says:"Nvidia has always been the only focus of the artificial intelligence market, but there are other important companies in the field of artificial intelligence, and not all companies are chip companies." He pointed out that Pacer ETFs Distributors' $PACER DATA AND DIGITAL REVOLUTION ETF$ also holds $Palo Alto Networks$ and other technology stocks, which are expected to benefit from the explosive growth in demand for AI.

This year, the rise of technology stocks, such as $Microsoft$ and $Apple$, which have risen far less than $Nvidia$, is a major reason for the S&P 500 Index's dependence on technology stocks. Some investors seem to think that Nvidia is the only winner in the AI field, but this may be a short-sighted approach. O'Hara believes that many other technology stocks will benefit from the explosive growth of demand for AI.

Pacer ETFs Distributors' president Sean O'Hara says:"Although there are occasional situations when the market is led by very few stocks, it will never last."$PACER DATA AND DIGITAL REVOLUTION ETF (TRFK.US)$N/A.$Oracle (ORCL.US)$, $CrowdStrike (CRWD.US)$N/A.$Palo Alto Networks (PANW.US)$, $Palantir (PLTR.US)$And$Snowflake (SNOW.US)$However, Nvidia is still the largest stock in this ETF's holdings, and perhaps this is not surprising.

However, Nvidia is still the largest stock in this etf's holdings, and perhaps this is not surprising.

Editor / jayden