FX168 Financial News Agency (North America) According to the latest interest rate cuts and economic data showing that the US economy is still in better shape than initially feared, the recent push for stock prices to hit new highs is mainly driven by some companies rather than the 'Big Seven' - Apple, Google's parent company Alphabet, Microsoft, Amazon, Meta, Tesla, and Nvidia.

But investors are still debating whether the next round of market gains will be led by a few large technology companies - just like the situation in 2023 and early 2024.

A report released last Friday (October 18) by FactSet showed that profit estimates for 493 companies in the S&P 500 index are expected to grow by an average of over 13% in the next five quarters, excluding the 'Big Seven'. In contrast, the 'Big Seven' are expected to see an average profit growth of nearly 19% over the same period.

It is worth noting that this means the growth rate of the 493 is expected to rise from 2024 onwards, while the growth rate of the Big Seven is expected to decline. This more positive trend of the 493 is one of the reasons why strategists predict the upward trend will continue to broaden. But as shown in the chart below, the gap in trend growth is narrowing.

(Source: Yahoo Finance)

Some believe that large technology companies may still be winners.

DataTrek co-founder Nicholas Colas said, 'Earnings growth for the Mag 7 is expected to surpass (and may be more reliable) that of other components in the index.'

Colas pointed out that these data indicate that technology stocks "should start catching up by the end of the year", as tech stocks with a higher proportion have lagged behind the Nasdaq 100 index in the past month and throughout 2024.

Colas wrote: "Looking ahead, the way to outperform the large cap lies in evaluating whether large tech companies or other companies in the S&P 500 index will show better earnings momentum." "If someone believes that the US GDP growth rate in 2025 can reach 3%, then the S&P 493 index may be a better choice. Our own view is that growth will be more moderate, which gives an advantage to large tech companies."

There are signs that part of the technology revival may already be evident. Nvidia's stock price surged to a historic high in the past month, the first time since June. Apple's stock price closed at a historic high of $235 per share last Friday, continuing to rise on Monday. Netflix, the first large tech giant to announce earnings, saw its stock price soar to a historic high after another impressive profit.

When considering the reasons why large tech companies lead the market, this move by the streaming giant may be the most inspiring. Even Netflix, whose stock price had risen by over 50% before profitability, managed to surprise Wall Street.

This may serve as an early reminder that while the growth in the tech industry is expected to slow down from the rapid growth of the past year, it does not mean that there will be no positive surprises or that it is still impossible to outperform the large cap. You can find empirical evidence without surpassing the expectations of many tech companies' earnings reports over the past 18 months.