NVIDIA surges, Apple and Tesla "lose speed," why are the tech giants in the US stock market diverging?

The tech giants in the US stock market are experiencing an unprecedented divergence.

Since 2025, the stock performance of the eight major US tech companies (NVIDIA, Microsoft, Apple, Google, Amazon, Meta, Broadcom, Tesla) has shown a clear polarization: NVIDIA, Broadcom, Microsoft, and Meta have outperformed the S&P 500 index, while Apple, Tesla, Google, and Amazon have significantly lagged behind.

UBS believes that this divergence reflects a reassessment of the market's expectations for AI investment returns from different companies. The key now is to identify which companies can maintain strong capital returns while making large-scale investments in AI infrastructure.

The Double-Edged Sword Effect of AI Investment

UBS states that behind the market divergence is a significant difference in investors' expectations for the fundamentals of each company.

From the adjusted data of the 6-month CFROI (Cash Flow Return on Investment), it can be seen that Broadcom has received the most positive earnings expectation revisions, while Tesla and Apple are facing negative revisions. The CFROI revisions for Google, Meta, Microsoft, and NVIDIA are relatively stable, indicating that investors' earnings expectations for these companies are relatively stable. Amazon's revision is slightly negative, reflecting market concerns about intensified competition in its cloud computing business.

These subtle revisions reflect the current market's high sensitivity to changes in the fundamentals of tech companies, directly affecting stock performance.

UBS believes that the core issue facing tech giants today is whether they can maintain strong capital returns against the backdrop of large-scale investments in AI infrastructure. Analyzing the driving factors of company profit changes from 2025, growth factors remain the main driving force.

Analysts state that the market is shifting from collective optimism about tech giants to differentiated pricing based on fundamentals, and investment strategies should shift from the previous "broad exposure to tech stocks" to "selecting individual stocks." Companies that can maintain strong capital returns during the AI investment wave while having relatively conservative growth expectations may offer better risk-adjusted returns.

Valuation Levels Returning to Rationality

Overall, the valuations of the eight major US tech companies are returning to rationality.

According to UBS's analysis of the market implied yield (MIY), the eight tech giants are currently at relatively cheap valuation levels compared to the past five years. More importantly, the historical valuation premium of these companies relative to the overall US stock market has recently narrowed significantly.

Data from July 2020 to July 2025 shows that the MIY of the eight tech giants has gradually declined from historical highs and is currently in a relatively reasonable range. The narrowing of the relative valuation premium indicates that the market's expectations for these companies have become more rational, no longer simply granting a "growth premium." Analysts believe that this valuation recalibration provides investors with a better entry point, especially for companies with strong fundamentals but relatively underperforming stock prices.

The eight tech giants as a whole continue to demonstrate remarkable profitability. This group is expected to maintain a CFROI of over 20% while achieving a 15% asset growth rate, driving sustained economic profit growth.

Analysts indicate that, based on historical trends, these companies have successfully offset the decline in asset turnover by improving profit margins.

From 2015 to 2024, the operating profit margin of this group increased from about 25% to over 40%, while asset turnover decreased from 0.6 times to around 0.4 times. This change reflects a shift in business models towards higher-margin operations.

The economic profit of the eight tech giants accounts for over 30% of the total economic profit in the U.S. stock market, providing fundamental support for their market capitalization. It is expected that by 2025, the economic profit of this group will reach approximately $600 billion, with NVIDIA, Microsoft, Meta, and Apple being the main contributors