US mega-caps lose $658bn as market rotates towards broader gains

Apple overtakes Nvidia as mega-caps diverge while Tesla and SpaceX lead the sell-off

The ten largest US companies by market capitalisation lost a combined $658 billion so far in July, as second-quarter earnings season exposed a widening divergence between artificial intelligence (AI) winners and laggards. The market is increasingly rewarding companies that expand revenue while maintaining spending discipline, and penalising those whose ambitions have outrun their balance sheets.

Apple was the standout beneficiary, adding $744.9 billion in market capitalisation to overtake Nvidia as the world's most valuable company. The move is notable given Apple largely sat out the AI capital expenditure (capex) race, relying instead on external partners such as Google for its rebuilt Siri. Investors have come to view that restraint as a strength rather than a weakness, particularly as capex commitments at Alphabet, Microsoft and Amazon run into the hundreds of billions of dollars each.

At the other end of the spectrum, Elon Musk's two public companies bore the brunt of the sell-off, together shedding more than $1 trillion in market value. SpaceX has fallen below its initial public offering (IPO) price despite an average Wall Street price target of $240.45 according to LSEG, having plunged close to 50% from its post-listing peak of $225.60. Tesla shares fell 27% after second-quarter adjusted earnings of $0.33 per share missed consensus estimates of approximately $0.50, operating margin collapsed to 1.4% from 4.1% a year earlier, and free cash flow turned negative for the first time since early 2024. Musk's repeated assurances on the robotaxi and Optimus scale-up have worn thin, with investors now demanding evidence that profitability can catch up with spending.

Month-to-date change in market capitalisation by company (in $ billion)

Rotation, not retreat : financials, healthcare and real estate underpin broadening market breadth

The tech pullback should not be mistaken for the end of the US bull market. Information Technology and Communication Services led July's laggards, while Financials, Health Care and Real Estate delivered solid gains, and Energy outperformed on Middle East-driven strength. Market breadth indicators, including the S&P 500 advance-decline line and the percentage of stocks above their 200-day moving average, have improved since June — a sign of a broadening, healthier bull market rather than one narrowly reliant on a handful of names.

The correction has been sharpest within memory chips, a subset of the broader Information Technology drag. Micron, SK Hynix and SanDisk — standout winners of the AI infrastructure build-out — have given back a third or more of their value since late June, providing a reset within a crowded trade. Even so, Micron remains up roughly 187% year-to-date.

S&P 500 month-to-date sector returns

Earnings still doing the heavy lifting: S&P 500 blended growth hits 37.9%

With 27% of S&P 500 companies having reported by 24 July, blended earnings growth stands at 37.9% year-on-year, the highest since Q3 2021, with 86% of companies beating earnings per share (EPS) estimates. Some of that headline strength is attributable to an outsized gain: excluding Alphabet, which delivered $98 billion from unrealised gains on an equity investment, blended growth falls to a still-solid 25.9%. Either way, this remains a market underpinned by genuine earnings delivery rather than multiple expansion alone.

Outlook: room beyond the mega-caps as equal-weighted S&P 500 narrows the gap

Concerns over capex and circular AI financing arrangements are likely to keep resurfacing, following a rally in AI-exposed names that has run largely uninterrupted since late 2022. Opportunities, however, look increasingly diversified: the equal-weighted S&P 500 has narrowed its performance gap with the cap-weighted index through July, and quality and value styles may regain favour as investors hedge against a fresh set of uncertainties – renewed tariff risk as Section 232 investigations continue, China's temporary trade truce expiring in November, and the run-up to the US mid-term elections. For a market that spent much of the year concentrated in a handful of names, July's broadening is a constructive signal.

S&P 500 vs. S&P 500 equal-weighted (one-year daily chart)

S&P 500 technical analysis: consolidation near 7,400

The US 500 daily chart maintains a strong long-term bullish bias above its 200-day moving average (MA), though short-term momentum has cooled into a consolidation phase around 7,400. Price action has slipped beneath both the 20-day and 50-day MAs, accompanied by a negative moving average convergence divergence (MACD). A decisive reclaim of the 7,462 – 7,482 MA zone is required to reignite momentum towards recent highs. Conversely, a breach of the 7,309 Fibonacci support puts the critical 7,224 swing low at risk, with deeper structural support resting near 7,078 – 7,120.

US 500 index daily price chart

The figures stated in this article are based on a snapshot taken on 29 July 2026 unless otherwise stated. Past performance is not indicative of future results.