However, there is a valid argument that no company can remain dominant forever. Of today’s top 10 S&P 500 companies, only Microsoft, Apple, and JP Morgan made that list back in 2010. Big profits attract competition, margins get squeezed, and once-dominant positions may fade. Scale itself becomes a hurdle: the larger a company grows, the harder it is to generate the ever-bigger profits needed to support its valuation. Nvidia, now the world’s largest company, is a case in point. With a market cap approaching $4.5 trillion, over three times the size of the JSE, maintaining earnings growth at such a scale is no small feat.

Perhaps the current batch of companies are fundamentally so superior that they will continue to grow stronger and larger in years to come. Nvidia, for instance, controls roughly 90% of the data centre AI chip market, which has surged alongside the explosive growth of AI. Over the past five years, its earnings have increased more than 24-fold. Remarkably, despite this already elevated base, Nvidia is still expected to nearly triple its profits over the next five years.

This concentration trend is not unique to the US. Bloomberg data shows that the top 10 companies in the UK’s FTSE All-Share Index account for roughly 40% of the index. FactSet data indicates the top 10 firms in Australia’s ASX200 represent about 50% of the market capitalisation, while in South Africa, the top 10 JSE companies also make up more than 50% of the total market.

At High Street, we recognise the risks that come with market concentration, particularly in the US where valuations are elevated. This concentration must also be viewed in the context of the future earnings power of today’s market leaders. While a great deal of AI-driven growth is already priced into the Magnificent 7, creating some downside risk, US mega-cap companies continue to enjoy powerful, often near-monopolistic advantages. They remain at the forefront of structural trends such as AI, cloud computing, and the broader digital transformation of the global economy. Our job is to separate those with real runway for growth from those whose momentum may be running out of tarmac.

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