Small Companies Join Tech Giants in Driving Stock Market Profits Higher

The stock market's profits are growing at their fastest pace in nearly 5 years, and it's not just the big tech companies doing all the work anymore.

For years, seven giant tech companies (called the "Magnificent Seven") have been responsible for most of the stock market's profit growth. These companies include Nvidia, Microsoft, Alphabet (Google's parent), Amazon, Meta (Facebook's parent), Apple, and Tesla. In the first quarter of 2026, these seven companies saw their profits jump by an impressive 63.2%.

But here's the exciting news: the other 493 companies in the S&P 500 (a list of America's 500 biggest public companies) are finally catching up. These smaller companies posted a 17.4% profit increase - their best performance since late 2021.

Several industries are contributing to this growth: • Materials companies are benefiting from high demand for fertilizer and lithium (used in electric car batteries) • Car companies like Ford are seeing better profits • Memory chip makers like Micron are riding the AI wave alongside Nvidia

However, there are some warning signs. Major retailers like Walmart, Target, and Home Depot report that consumers are being more careful with their spending due to higher gas prices from the Iran conflict. Walmart even noticed customers putting less gas in their cars to save money - a sign that people are feeling financial pressure.

The bottom line: While tech giants continue to lead, it's encouraging to see smaller companies finally contributing to overall market growth again.

This is an AI-generated summary. Read the original article at: https://www.marketwatch.com/story/these-underdogs-are-a-big-reason-s-p-500-profit-growth-is-the-fastest-in-nearly-5-years-4a43f142?mod=mw_rss_topstories