It's always fun to root for the underdog. But on three separate occasions last week, the stock market served up a reminder to investors that backing the favorite often pays off.
Shares of chip giant Nvidia, drugmaker Eli Lilly, and entertainment company Walt Disney all surged after the three companies underlined their dominance. Their respective rivals-- Advanced Micro Devices, Novo Nordisk, and Comcast--were left behind.
It's not surprising that the top dogs are outperforming right now. Stocks have rallied in recent days following a rough stretch for the market, but investors are still skittish enough that they only want to buy proven winners.
"People are willing to buy stocks where there's a strong narrative," Kathleen Brooks, research director at XTB, tells Barron's. "Where there are cracks in the narrative, stocks are getting punished."
Nvidia is the kingpin of the entire market, so it's fitting that the $5 trillion chip maker had a good week while AMD struggled.
The catalyst was SpaceX CEO Elon Musk saying that the rocket and AI company would exclusively use Nvidia graphics processing units from now on, sending Nvidia stock up 3.4% and AMD shares down 7% on Wednesday.
AMD had been outperforming its better-known rival for most of 2026, but Musk's bombshell may have flipped the script. The announcement, which overshadowed AMD's second-quarter earnings, were a painful reminder that the company still has a long way to go to catch up with Nvidia.
Lilly and Disney also strode ahead in their own respective two-horse races last week.
Lilly posted a blockbuster second quarter on Wednesday as surging demand for weight-loss drugs drove up its earnings and revenue, sending its shares up more than 3%. A day earlier, Novo stock had dropped 6% after the Danish drugmaker's own results failed to wow investors.
Disney closed about 4% higher on Wednesday after the House of Mouse's all-important experiences division--which includes theme parks and cruises--reported a 20% surge in operating income from a year ago.
Meanwhile, NBCUniversal parent Comcast faces soft demand for its own parks, including Epic Universe in Orlando--a park that some investors worried would chip away at the dominance of Walt Disney World.
There may be other opportunities for investors who feel like backing the favorite. Barron's argued last month that South Korean memory-chip maker SK Hynix looks like a good bet because it's bigger, cheaper, and closer to Nvidia than its main rival, Micron.
In the ride-hailing industry, Uber dominates Lyft--but still trades at a cheaper valuation. And in soft drinks, Coca Cola has clobbered Pepsi in 2026 thanks to Coke Zero and a move over the past decade to spin off nearly all its bottling operations, which has made Coke asset-light.
The choice stocks' outperformance won't last forever. Wall Street is being selective right now, but that could change if Iran and the U.S. are able to forge a lasting peace deal, which would ease fears about a flare-up in inflation and higher interest rates.
In that situation there could be "a rally for stocks where money just goes everywhere," says Brooks. "In a more bullish environment, the companies that don't have such a good story right now will eventually catch up."
Back the favorite at your own peril. But last week's rallies by Nvidia, Lilly, and Disney show that for now, this is the top dogs' market.
