As we reflect on the events of the second quarter, it is increasingly evident that we are witnessing a persistent tale of two markets in the U.S. It’s been the best of times for the largest U.S. stocks which have consistently delivered exceptional returns, fueling much of the stock market's ascent to all-time highs. These companies, characterized by strong fundamentals, sustainable growth prospects, and resilient business models, have exerted a disproportionate influence on global stock market performance. The U.S. stock market is now more concentrated than ever, with the top ten stocks representing 35% of the S&P 500. Even during the dot-com era, the combined weight of the top ten stocks peaked at only 25%, albeit the technology companies of today have stronger profitability and more sustainable business models. To look at it another way, the Magnificent 7 stocks are now worth more than the combined stock markets of Japan, Canada, and the U.K. Stripping out these seven stocks, the rest of the U.S. market has performed in-line with the rest of the world since the beginning of 2023. While some sectors and companies have shown resilience and growth, a significant portion has not kept pace with the highflyers.

As we reflect on the events of the second quarter, it is increasingly evident that we are witnessing a persistent tale of two markets in the U.S. It’s been the best of times for the largest U.S. stocks which have consistently delivered exceptional returns, fueling much of the stock market's ascent to all-time highs. These companies, characterized by strong fundamentals, sustainable growth prospects, and resilient business models, have exerted a disproportionate influence on global stock market performance. The U.S. stock market is now more concentrated than ever, with the top ten stocks representing 35% of the S&P 500. Even during the dot-com era, the combined weight of the top ten stocks peaked at only 25%, albeit the technology companies of today have stronger profitability and more sustainable business models. To look at it another way, the Magnificent 7 stocks are now worth more than the combined stock markets of Japan, Canada, and the U.K. Stripping out these seven stocks, the rest of the U.S. market has performed in-line with the rest of the world since the beginning of 2023. While some sectors and companies have shown resilience and growth, a significant portion has not kept pace with the highflyers.

In the last 18 months, generative artificial intelligence, or GenAI, has inspired the world’s imagination for a brighter future, a future where we can get things done more easily and contribute to solving problems from healthcare to climate change, to education, to poverty and hunger. Some have equated the transformations that AI might bring to the industrial revolution or the introduction of electricity. Before we get carried away, what exactly is GenAI? In its simplest definition, GenAI is the ability of computer systems to process vast amounts of data, learn from it iteratively and present solutions in a very timely manner, sometimes better and faster than our own human intelligence.