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Investing.com - A recent rally in tech stocks is becoming increasingly polarized, with names like Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT) outpacing even its "Magnificent Seven" mega-cap peers such as Apple (NASDAQ:AAPL), according to analysts at BCA Research.
In a note, the strategists led by Dhaval Joshi flagged that shares of Nvidia and Microsoft have surged to new all-time peaks almost 20% above their respective prior record highs. Apple, on the other hand, is "languishing" nearly 20% below its high notched in early 2025, they added.
"U.S. tech stocks and the so-called ‘Magnificent Seven’ are no longer behaving as a homogeneous block," they wrote in a note. Members of this club of tech giants, which also include Amazon (NASDAQ:AMZN), Tesla (NASDAQ:TSLA), Alphabet (NASDAQ:GOOGL), and Meta Platforms (NASDAQ:META), have largely outpaced the broader S&P 500 in recent years, fueled in large part by a boom in enthusiasm over the applications of artificial intelligence.
But the dispersion between some of these names has raised questions over whether U.S. tech can even be considered a "single sector," the analysts suggested.
One explanation for the trend could lie in these companies’ various prospects for AI, the analysts said, with the euphoria around the nascent technology becoming ever more narrowly concentrated in just a handful of stocks.
Nvidia, whose high-end chips have become integral cogs in the training of AI models, has long been viewed as a figurehead of the boom, while Microsoft’s partnership with ChatGPT-maker OpenAI has allowed it to take a perceived leap ahead of its tech industry rivals in the AI arms race.
But many observers have viewed Apple as a relative laggard in AI, with the firm’s capital spending plans hovering well below those of its nearest competitors. Apple’s shares have partially reflected these worries, slipping in the double-digits so far this year.
"[W]hen the largest company in the world, Apple, suffers a market value slump of 20 percent, equating to $0.7 trillion, it would usually spell trouble for the stock market. Yet the surge in the market values of the other tech superstars, Nvidia and Microsoft, has more than compensated for Apple’s loss," the BCA analysts noted.