Amazon.com Inc.’s stock price breached $1,000 for the first time ever on Tuesday, the latest sign of how technology stocks have dominated trading this year.
The information technology sector of the S&P 500, which includes tech stalwarts like Facebook and Apple Inc., is up more than 19% so far this year, making it by far the best performing sector in the index.
Amazon isn’t technically a part of the sector, but is often discussed alongside it. So far in 2017, money has flowed into funds tracking technology stocks at the fastest pace in at least 15 years.
The tech surge has led to a race to $1,000 between Amazon and Google parent Alphabet, whose Class A shares were recently at $993.50 The so-called FANG stocks — Facebook, Amazon, Netflix Inc., and Alphabet — exert more control over the broader stock market than ever.
Those four stocks make up about 7.5% of the market value of the S&P 500, versus 3% five years ago, according to Bespoke Investment Group.
Many tech firms have been posting solid profitability and strong revenue growth. That’s been attractive to investors, reinforcing a familiar trade during a period where the U.S. economy remains sluggish.
Amazon, whose stock is up more than 33% this year, said in April that profit rose 41% in the first three months of the year, its eighth consecutive quarter in the black.
Of course, that’s also led to some concern among investors, particularly those who remember the dot-com bubble of the late 1990s.
Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, wrote this month that the longer it takes for economic growth to accelerate and bond yields to rise, the “greater risk of tech mania.”
Amazon and Alphabet are the second- and third-most expensive stocks in the S&P 500, trailing only Priceline Group, which was trading recently at $1,861.
Three other U.S.-listed stocks cost more: homebuilder NVR, at $2,286 in recent trading; agribusiness and transportation company Seaboard, at $3,994, and Warren Buffett’s Berkshire Hathaway, at $248,990.
But share price alone indicates next to nothing about the value of the company. At more than $475 billion, Amazon’s market capitalization is bigger than Berkshire, Seaboard and NVR combined.
Alphabet, meanwhile, has a market cap of more than $675 billion, second only to Apple Inc.
Amazon’s push above $1,000 also illustrates the decline of the so-called stock split. In the past, if a company’s share price got too high, it would split its shares to lower the price and make them more attractive to small-time investors.
So far this year, there have been only two share splits by companies in the S&P 500. In 1997, the year Amazon went public, 93 companies in the index split their shares, according to Birinyi Associates.
Amazon has split its shares three times–once in 1998, and twice in 1999. If it hadn’t, but all else had stayed the same, the shares would be at $12,000 now.
A share split is the equivalent of trading a dime for two nickels, multiplying the number of shares available, while dividing the price by the same amount.
Many companies are forgoing the costs associates with a split, often finding it has little impact on how investors perceive the stock.