Passive Investing’s Impact on Big Tech Is Being Underestimated
Big Tech continues to have a very strong year on Wall Street. On a collective basis, Big Tech has seen about $4.5 trillion of market capitalization gains since January. While the move has led to some valuation diehards, usually those in academia, becoming louder in opposition to the move, the role passive investing is playing in Big Tech’s rise is flying under the radar.
Thanks to passive investing, Big Tech is receiving a non-trivial amount of demand on Wall Street and in the process has become a proxy for the global economy. Big Tech market capitalization gains (and losses) are increasingly following broader stock market sentiment. This change has a few significant consequences that aren’t receiving much attention.
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