Analyst: The narrow breadth of the U.S. stock market rally is not a new issue; the so-called "Magnificent Seven" are actually underpinned by hundreds of companies.

Bloomberg ETF analyst Eric Balchunas wrote in a recent post that while concerns about the narrow breadth of the U.S. stock market rally have been repeatedly raised, this phenomenon does not necessarily mean investors need to worry. Citing 100 years of market data, he noted that only around 4% of stocks have generated all the net wealth gains in the U.S. stock market, while roughly half of companies have underperformed U.S. Treasuries over the long term, indicating that stock market returns have long been highly concentrated in a small number of firms. Balchunas further pointed out that the large tech companies driving the current U.S. stock rally differ from traditional large enterprises, as they have built massive business empires through extensive mergers and acquisitions. For instance, Microsoft and Google have each acquired roughly 270 companies. Therefore, he argues that investors should not assess their market influence solely based on the name of a single listed company, but should view the "Magnificent Seven" (Mag 7) as a business system composed of hundreds of underlying firms, even jokingly referring to it as "Mag 700". He also noted that if Google’s subsidiary YouTube were to spin off and go public, he estimates it would rank among the top 20 companies by market cap in the S&P 500. The scale and influence of these firms far exceed those of a single corporate entity, which may explain why, even as the current U.S. stock index rally is concentrated in a small number of large tech stocks, there is still broad corporate assets and business support behind it.