By Lewis Krauskopf
NEW YORK, June 3 (Reuters) – The charge higher in U.S. technology stocks has made broader indexes as reliant as ever on the group — and more vulnerable should those market leaders trip up.
With stunning gains over the past two months, the S&P 500 technology sector now accounts for more than 39% of the market capitalization of the overall benchmark index, its highest on record and above the level it reached during the 2000 Internet bubble.
“If the small number of tech stocks that have been leading this market higher roll over, by definition, the indexes are going to roll over,” said Matthew Maley, chief market strategist at Miller Tabak. “And when the indexes roll over in a meaningful way, the money flows inevitably reverse.”
The massive build-out to support expected booming AI use has lifted profit estimates for semiconductor and other tech companies, and with it their shares.
“There is clearly an overarching AI theme to what is working,” said Liz Ann Sonders, chief investment strategist at the Schwab Center for Financial Research.
While tech has long dominated the S&P 500, its recent outperformance bolstered its sway. Since the market’s March low for the year, the tech sector soared nearly 47%, more than doubling the S&P 500’s gain in that time, led by semiconductors. Micron shares jumped 230% in that time, while Intel and Advanced Micro Devices gained more than 160%.
The tech-driven rally has come despite headwinds from higher energy prices, amid the war in Iran, leading to inflation worries and expectations of a more hawkish Federal Reserve.
Investors are wary of some sort of trigger that could undercut the AI narrative.
“The way they’re performing … is like you’re driving a race car at 200 miles an hour,” said Walter Todd, chief investment officer at Greenwood Capital. “It doesn’t take much to cause an accident at that speed.”
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While semiconductor shares have posted eye-popping gains, other tech areas have also performed well. The S&P 500 hardware group, including Dell, Cisco and Apple, is up over 40% since the March low. Software, which was pummeled earlier in 2026 on AI disruption concerns, is up 28%, recouping some losses.
The AI theme extends beyond tech. For example, with Alphabet, Amazon and Meta Platforms — megacap companies not classified as tech stocks but that spend massively on AI infrastructure — the share of S&P 500 market value in tech and AI-investing companies swells to more than half. Industrial and utilities companies are benefiting from construction and energy demand tied to the AI build-out.
