Mega-cap tech corporations have been main the inventory market greater. AI funding has been driving financial progress. We hear about these storylines each single day in finance media.
Sometimes, some charts and stats minimize by the noise and supply some killer context. Listed below are a pair that just lately caught my eye.
Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), Alphabet (GOOG, GOOGL), Amazon (AMZN), Meta (META) Platforms, and Tesla (TSLA) — the trillion-dollar corporations collectively referred to as the “Magnificent Seven — account for a few third of the S&P 500’s mixed market capitalization.
This concentration among the largest companies makes some folks nervous. As a result of what if a number of of those corporations sees demand bitter and buyers dump the shares?
“They could go by the Magnificent Seven, however the fact is that they act extra just like the Magnificent Seventy,” Bloomberg’s Eric Balchunas and Breanne Dougherty wrote. “Collectively, the Seven have acquired over 800 corporations and expanded right into a dizzying array of industries — successfully functioning as conglomerates of superior expertise, whereas nonetheless rising organically.”
Every of the Magnificent Seven corporations are made up of huge corporations. (Supply: Eric Balchunas)
For essentially the most half, the subsidiaries are tech-oriented or companies leveraging lots of tech.
Nonetheless, it’s practically unattainable to discover a family or enterprise that isn’t recurrently utilizing a number of items or providers provided by at the least just a few of those names.
“Considered this fashion — as dozens of corporations inside each — issues about their document 33% weighting within the S&P 500 miss the purpose: the index should be as diversified as ever,” Balchunas and Daugherty added.
AI has been a hot story for about three years. And the excitement solely appears to be heating up.
Take a look at this chart from Luke Kawa at Sherwood Information. It tracks analysts’ estimates for AI capex by the main hyperscalers: Microsoft, Alphabet, Amazon, Meta, and Oracle. The curve suggests the funding spending is accelerating.
AI capex spending by the hyperscalers has been heating up. (Supply: Sherwood)
And simply how massive is the AI capex story within the context of the financial system?
Renaissance Macro’s Neil Dutta caught this unimaginable growth in the latest GDP report.
“To this point this yr, AI capex, which we outline as info processing gear plus software program, has added extra to GDP progress than shoppers’ spending,” Dutta said.
AI capex is contributing extra to GDP progress than private consumption. (Supply: Sherwood, Renaissance Macro)
What’s so spectacular about that is how small AI capex is within the context of the financial system.
“The U.S. client makes up about 70% of the financial system,” Sherwood’s Kawa noted concerning the stats. “Over the long run, that’s been the undisputed engine of progress. However these two segments that make up 6% of GDP have been enjoying an even bigger position in fueling the enlargement to date this yr, on common.”
In different phrases, a comparatively small slice of the financial system is rising so quick that it’s change into the dominant progress story for the entire financial system.
There have been a number of notable knowledge factors and macroeconomic developments since our last review:
👎 Inflation expectations warmth up. From the New York Fed’s July Survey of Consumer Expectations: “Median inflation expectations in July elevated on the one-year-ahead horizon to three.1% from 3.0% and on the five-year-ahead horizon to 2.9% from 2.6%. They remained regular on the three-year-ahead horizon at 3.0%.”
⛽️ Gasoline costs tick greater. From AAA: “Gasoline costs fluctuated barely this previous week with the nationwide common for a gallon of standard going up by two cents to $3.16. Crude oil costs are hanging within the mid $60s per barrel, conserving pump costs regular. Provide stays considerable, as OPEC+ — a gaggle of oil-producing nations — just lately introduced it is going to be boosting manufacturing once more subsequent month, following a number of different will increase this yr.”
🏠 Mortgage charges tick decrease. Based on Freddie Mac, the typical 30-year fixed-rate mortgage declined to six.63% from 6.72% final week. From Freddie Mac: “The 30-year fixed-rate mortgage dropped to its lowest degree since April. The decline in charges will increase potential homebuyers’ buying energy, and Freddie Mac analysis exhibits that patrons can save hundreds by getting quotes from just a few totally different lenders.”
There are 147.9 million housing units within the U.S., of which 86.1 million are owner-occupied and about 39% are mortgage-free. Of these carrying mortgage debt, virtually all have fixed-rate mortgages, and most of these mortgages have rates that were locked in earlier than charges surged from 2021 lows. All of that is to say: Most owners will not be significantly delicate to the small weekly actions in house costs or mortgage charges.
🏭 Enterprise funding exercise deteriorates. Orders for nondefense capital items excluding plane — a.okay.a. core capex or business investment — decreased 0.8% to $75.4 billion in June.
💼 New unemployment claims stay low — however whole ongoing claims are up. Initial claims for unemployment benefits rose to 226,000 through the week ending Aug. 2, up from 219,000 the week prior. This metric stays at ranges traditionally related to financial progress.
Insured unemployment, which captures those that proceed to assert unemployment advantages, rose to 1.974 million through the week ending July 26. This metric is close to its highest degree since November 2021.
Regular preliminary claims affirm that layoff exercise stays low. Rising continued claims affirm hiring exercise is weakening. This dynamic warrants shut consideration, because it displays a deteriorating labor market.
💪 Labor productiveness will increase. From the BLS: “Nonfarm enterprise sector labor productiveness elevated 2.4% within the second quarter of 2025 … as output elevated 3.7% and hours labored elevated 1.3%. (All quarterly % modifications on this launch are seasonally adjusted annualized charges.) From the identical quarter a yr in the past, nonfarm enterprise sector labor productiveness elevated 1.3% within the second quarter of 2025.”
🤑 Wage progress is cool. Based on the Atlanta Fed’s wage growth tracker, the median hourly pay in July was up 4.1% from the prior yr, down from the 4.2% charge in June.
💰 Family funds could possibly be higher, however are principally normalizing. From the New York Fed’s Q2 Household Debt & Credit report: “Transition into early delinquency held regular for practically all debt sorts apart from scholar loans. Scholar loans noticed one other uptick within the charge at which balances went from present to delinquent as a result of resumption of reporting of delinquent scholar loans. Transitions into critical delinquency had been combined throughout debt sorts: auto loans and bank card debt had been largely secure, mortgages and HELOCs edged up barely, and scholar loans rose sharply.”
Whereas the speed at which debt is coming into delinquency has elevated, the full quantity of debt in delinquency stays low, at simply 4.4% of excellent debt.
And whereas bank card debt balances usually steal headlines, it’s a mistake to say shoppers are maxing out their bank cards. The $1.2 trillion in bank card balances as of Q2 represents only a tiny fraction of bank card limits.
💳 Card spending knowledge is powerful, however could possibly be pushed by “buyahead” earlier than tariffs. From JPM: “As of 31 Jul 2025, our Chase Shopper Card spending knowledge (unadjusted) was 3.3% above the identical day final yr. Based mostly on the Chase Shopper Card knowledge by 31 Jul 2025, our estimate of the US Census July management measure of retail gross sales m/m is 0.61%.”
(Supply: JPM)
From BofA: “Complete card spending per HH was up 3.0% y/y within the week ending Aug 2, in accordance with BAC aggregated credit score and debit card knowledge. On-line retail noticed the most important y/y spending acquire whereas leisure noticed the most important drop vs final week, throughout our classes. The numerous rise this week could possibly be buyahead earlier than the Aug 1 tariff deadline/early month volatility.”
🤷🏻 Companies surveys could possibly be higher. From S&P World’s July Services PMI: “July’s enlargement was pushed by surging demand within the tech sector alongside rising monetary providers exercise, the latter linked to bettering monetary circumstances fueled in flip by latest inventory market good points. Nonetheless, falling exports of providers, which incorporates spending within the US by vacationers, acted as a drag on progress alongside subdued demand from shoppers extra broadly.”
Take into account that throughout instances of perceived stress, mushy survey knowledge tends to be extra exaggerated than precise laborious knowledge.
🏢 Workplaces stay comparatively empty. From Kastle Systems: “Peak day workplace occupancy was 63.5% on Tuesday final week, down 1.4 factors from the earlier week. Occupancy fell most days of the week in all 10 tracked cities, as staff took time away from the workplace throughout the nation. The common low was 34.2% on Friday, down 9 tenths of some extent from the earlier week.”
📈 Close to-term GDP progress estimates are monitoring positively. The Atlanta Fed’s GDPNow model sees actual GDP progress rising at a 2.5% charge in Q3.
🚨 The Trump administration’s pursuit of tariffs threatens to disrupt international commerce, with important implications for the U.S. financial system, company earnings, and the inventory market. Until we get more clarity, right here’s the place issues stand:
Actions converse louder than phrases: We’re in an odd interval, on condition that the laborious financial knowledge decoupled from the soft sentiment-oriented data. Shopper and enterprise sentiment has been comparatively poor, whilst tangible client and enterprise exercise continues to develop and development at document ranges. From an investor’s perspective, what matters is that the laborious financial knowledge continues to carry up.
Assume long-term: For now, there’s no purpose to consider there’ll be a problem that the financial system and the markets won’t be able to overcome over time. The long game remains undefeated, and it’s a streak that long-term buyers can count on to proceed.
