Investors are willing to pay higher valuations for technology companies sending their market capitalizations soaring. Technology companies now represent almost 50% of large-cap U.S. equities. Although the weighting is similar to the dot-com bubble, the leading technology companies today are highly profitable. For the quarter ended June 30, Apple, Microsoft, Amazon, Alphabet and Facebook all had $5 billion or more in GAAP net income.
Tech market cap soaring
The rise of technology is coming at the expense of financial firms. For the first time since the Great Recession, financial companies represent less than 10% of the U.S. equities.
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