Ten stocks now command roughly 41 cents of every dollar invested in the S&P 500, nearly twice the 23 cents spread across the index’s 402 smallest companies.
Nvidia Takes 8 Cents of Every Dollar
Nvidia Corp. (NASDAQ:NVDA) leads the S&P 500 with 8 cents of every dollar, ahead of Apple Inc. (NASDAQ:AAPL) at 7, Microsoft Corp. (NASDAQ:MSFT) and Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) at 6 each, and Amazon.com Inc. (NASDAQ:AMZN) at 4, according to data shared by The Kobeissi Letter citing Citadel Securities.
Broadcom Inc. (NASDAQ:AVGO), Meta Platforms Inc. (NASDAQ:META), Tesla Inc. (NASDAQ:TSLA), Micron Technology Inc. (NASDAQ:MU), and Advanced Micro Devices Inc. (NASDAQ:AMD) round out the top 10 with another 10 cents combined.
The next 10 largest companies account for just 10 cents combined, while the other 402 companies in the index share 23 cents.
The top 10 account for almost twice as much as those 402 combined.
“Diversification is dying,” the market commentator said on X. “Big Tech effectively is the market.”
Concentration Hits a Record
Creative Planning data cited by Yahoo Finance shows Nvidia, Apple, and Microsoft now make up more than 21% of the S&P 500, the highest concentration in three stocks in the benchmark’s history.
By comparison, International Business Machines Corp. (NYSE:IBM), AT&T Inc. (NYSE:T), and Exxon Mobil Corp. (NYSE:XOM) together represented 13.4% of the index at their peak in the mid-1980s.
The S&P 500 rose 0.58%, and the Nasdaq Composite gained 0.45% on Tuesday, both hitting record highs.
Nvidia’s stock hit a record intraday high of $243.37, with the chipmaker’s market value nearing $6 trillion after a nearly 30% gain over the past year.
Index Funds Carry the Concentration
The State Street SPDR S&P 500 ETF Trust (NYSE:SPY), with $815.33 billion in assets and a 0.09% expense ratio, holds Nvidia at 7.78%, Apple at 7.45% and Microsoft at 5.71%. It has gained 14.04% this year and 16.44% over the past year.
The Vanguard S&P 500 ETF (NYSE:VOO), with $1 trillion in assets and a 0.03% expense ratio, holds Nvidia at 7.55%, Apple at 7.05%, and Microsoft at 5.36%. It has returned 13.99% this year and 16.42% over the past year.
The Invesco S&P 500 Equal Weight ETF (NYSE:RSP) sidesteps the mega-cap concentration by giving each stock in the index about the same weight. It has gained 10.10% this year and 11.55% over the past year, trailing both funds.
Price Action: The State Street ETF closed 0.55% higher at $779.09 and gained 0.65% to $779.87 in extended trading.
According to Benzinga Edge rankings, the State Street ETF has a Momentum score in the 73rd percentile, with a positive price trend across the short, medium, and long term.
See More: Top Momentum Stocks
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo Courtesy: ANDRANIK HAKOBYAN on Shutterstock.com
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