Skeleton

Wall Street’s got bad breadth. 

Sound a little off-putting? It is for many of those investing outside the tech realm. 

Market breadth measures the number of stocks participating in a particular move, irrespective of what the index is doing. And this week, the S&P 500 hit a new record, but 70% of its stocks were trading at least 10% lower than their highs. 

But even when you peel back the skin, the index has got strong bones. A handful of megacap tech names are driving the big move higher. On Monday, its largest stock, Nvidia ($NVDA), rose 2.1% to an all-time high, taking its market cap to US$5.6T.

Meta ($META), Microsoft ($MSFT) and Tesla ($TSLA) also rallied in the day’s early trade as AI momentum continued. On Tuesday, AMD ($AMD) and TSMC ($TSM) lifted the index higher.

Broadcom ($AVGO) rallied after news that major Wall Street banks were helping Broadcom raise US$60B in debt to finance its custom AI chips – most of which goes to Anthropic, on track to become its largest customer by 2027.

On Tuesday, its smaller rival Marvell ($MRVL) guided between US$70B and US$90B of fiscal revenue by 2031 on its analyst day. Marvell’s investor guidance also lifted optical networking firm Ciena ($CIEN) 13% and Nokia ($NOK) 7% on Tuesday.

AI energy suppliers also had a good day after Constellation ($CEG) announced a new set of deals with Alphabet ($GOOGL). $CEG rallied 12% on the news, with sector spillover taking effect in Vistra ($VST), Talen ($TLN) and Oklo ($OKLO).

Memory chip makers found themselves on the wrong side of the market: Seagate ($STX) and Western Digital ($WDC) fell after Toshiba announced plans to double hard drive capacity by FY27. But Cantor Fitzgerald thinks the selloff is ‘overdone’ and says Toshiba’s plans wouldn’t materially change the industry’s supply constraints.

This week’s price action paints a clear picture of a narrow rally. The top 10 stocks claim 41 cents of every dollar in the S&P 500, and outweigh the next 402 companies.

That's a lot of weight on a few names, but with AI demand still accelerating, the frame looks like it's getting sturdier. Strong bones, thin muscle… for now, that's enough for a record.

This is not financial advice nor a recommendation to invest in any of the securities listed. The information presented is for general information purposes only and intended to be of a factual nature only. Past performance and forecasts are not a reliable indicator of future performance. The value of your investments can go down as well as up and you may receive back less than your original investment. The author of this article and other employees of Stakeshop Pty Ltd may hold positions or have financial interests in the company (or companies) discussed above. As always, do your own research and consider seeking financial, legal and taxation advice before investing.

Samy Sriram

Markets Analyst

Samy is a markets analyst at Stake, with seven years of experience in the world of investing, working across roles in private banking, venture capital and financial media. She has a Master’s degree in Finance and Data Analytics from The University of Sydney Business School.