The S&P 500 is supposed to represent 500 companies. In practice, it increasingly represents about 10 of them.
The top 10 stocks in the index now account for 43% of its total market capitalization, a record high. To put that in perspective, the historical average from 1990 to 2015 hovered between 18% and 23%. The index that millions of retirement accounts treat as the gold standard of diversification is now nearly twice as concentrated as it was for most of modern market history.
The usual suspects are running the show
The names at the top won’t surprise anyone who’s been paying attention. NVIDIA commands roughly 7% of the entire index on its own. Apple sits at about 6.7%. Alphabet, when you combine both share classes, accounts for approximately 6.3%.
Microsoft clocks in at around 4.1%, with Amazon close behind at 3.8%. Broadcom and Meta Platforms round out the group often labeled the “Magnificent Seven.”
