Bryan Taylor, Chief Economist, Finaeon
The concentration of the US stock market hit all-time highs in July. The Top 10 stocks in the S&P 500 with a market cap of $21.25 trillion represented 38.04% of the capitalization of the S&P 500. The total market cap for the S&P 500 is $55.9 trillion. The previous record was set in December 2024 when the Top 10 stocks represented 37.27% of the S&P 500. The Top 5 stocks represented 28% of the S&P 500 with a market cap of $15.638 trillion. What drove the concentration to new highs was the increase in the capitalization of Nvidia, currently worth over $4.4 trillion, which is the first stock to achieve a $4 trillion market cap. At its current rate of growth, Nvidia could reach $5 trillion next year, or maybe even this year.
The three top stocks, Nvidia, Microsoft and Apple at $11.4 trillion are larger than any stock market outside of the United States. Between 2016 and July 2025, the Information technology and communications sectors have grown from $4.5 trillion in market cap to $23.6 trillion. Together, those two sectors now represent 44% of the S&P 500 versus 23% in 2016.
The amazing growth in concentration is illustrated in Figure 1. The Top 10 stocks represented only 16.2% of the S&P 500 as recently as 2014, but since then the growth in the market cap of information technology and communication stocks has dominated the market. There appears to be nothing to prevent the Top 10 stocks from reaching 40% of the S&P 500 by next year. The primary factor that could prevent that would be a reduction in investment in AI or a bear market.
Figure 1. Top 10 Stocks as a share of the S&P 500, 1875 to 2025
Source: Finaeon
As we have discussed before, increased market concentration does not portend a bear market. When the concentration peaked in the market back in the mid-1960s, the market continued to rally for another decade as the benefits of the bull market spread to the rest of the economy. Inevitably, at some point, the bull market will reverse, and the market will become less concentrated, but in the meantime, enjoy the ride.
