
While the S&P 500 Index has returned to all-time highs, the large-cap benchmark has never been more concentrated in a single stock than it is today, highlighting new concentration risks for a market where valuations continue to surge.
As of July 18, chipmaker Nvidia (NVDA) accounted for 7.9% of the S&P 500, according to S&P Dow Jones data cited by analyst Charlie Bilello.
“The S&P 500 has never been more concentrated in a single stock than it is today with Nvidia,” noted financial adviser and Creative Planning CEO Peter Mallouk.
The S&P 500 has never been more concentrated in a single stock than it is today with Nvidia representing close to 8% of the index. pic.twitter.com/q6mYBBrUXI
undefined Peter Mallouk (@PeterMallouk) July 23, 2025
For context, Apple (AAPL) represented 7.6% of the S&P 500 only recently, and during the dot-com bubble, Microsoft (MSFT) made up 4.9% of the index.
Although the S&P 500 is designed to be broadly diversified, it has long carried concentration risks due to a handful of large-cap companies — particularly from the fast-growing tech sector — dominating the index. Nvidia’s nearly 8% weight suggests the index is becoming increasingly concentrated over time.
As InvestorsObserver recently reported, Nvidia has become the first publicly traded company to reach a $4 trillion market cap — a milestone driven by the global shift toward AI and other data-intensive computing needs.
In achieving this feat, Nvidia’s market value surpassed that of the entire German stock market by nearly $1 trillion.
Concentration risks extend beyond Nvidia
Nvidia is among a small group of Big Tech giants that now account for an outsized share of the stock market.
At the start of the year, the top 10 stocks made up nearly 40% of the S&P 500, surpassing even the peak levels seen during the dot-com bubble and marking the highest concentration since record-keeping began in 1975, according to data from Tema ETFs.
While this top-heavy leadership has become more of a feature than a bug for major indexes, it carries significant downside risk if these dominant companies falter due to disappointing earnings, regulatory scrutiny, or other company-specific issues.
“When a handful of stocks dominate the market [...] if you do have a period of disappointment from those stocks, you could see disproportionate impacts on your portfolio from just a handful of company-specific issues,” said Michael Reynolds, an executive at Glenmede, a Philadelphia-based wealth manager.
“The biggest stocks are very expensive,” said Lisa Shalett, chief investment officer at Morgan Stanley. “If the biggest stocks fall the most, the index is very vulnerable.”
To mitigate concentration risk, portfolio managers often adopt a multi-pronged approach, such as diversifying internationally, focusing on factor-based investing, or utilizing alternative indexing strategies.
Your email address will not be published. Required fields are markedmarked