According to a UBS analysis, the six biggest companies in the S&P 500, Apple (AAPL, Financials), Amazon (AMZN, Financials), Alphabet (GOOGL, Financials), Meta Platforms (META, Financials), Microsoft (MSFT, Financials), and Nvidia (NVDA, Financials), which together account for more than 31% of the index's total market capitalization, are somewhat less expensive than the market in general.
UBS noted in its study that, despite their dominating position, valuation multiples for these mega-cap firms have expanded more slowly than the market overall. Jonathan Golub, the main U.S. equities analyst for the business, underlined that for these firms in 2024 gains were more driven by profits growth than by other factors relative to the rest of the market.
UBS claims that although the larger market had a considerably lesser gain of 5.0%, the Big 6 saw profits rise of 38.9% in 2024. Concurrent with this, valuation multiples for the Big 6 increased by 5.8%, less than the 8.6% seen throughout the market, therefore underlining their relative affordability.
Looking forward, UBS estimated that these six businesses will continue to develop very fast. Their profits are estimated to rise by 19.1% in 2025, more than the 10.8% expected expansion of the whole market. Although the difference in earnings-per-share growth is predicted to close, it will still be much larger than the historical average of thirty years, 5%.
The analysis also pointed out that the performance of these equities has been substantially influenced by changes in earnings expectations. While forecasts for the remainder of the market reflect a declining tendency, UBS said that predictions for the Big 6 in 2024 have been constantly raised. For 2025 a similar trend is developing.
According to UBS's research, the Big Six are not only main drivers of market performance but also attractively priced prospects for investors approaching the new year.
