For much of the past few years, major market indexes have experienced unprecedented growth. The S&P 500 (SNPINDEX: ^GSPC) is up nearly 77% over the past three years alone, as of this writing, while the tech-heavy Nasdaq Composite (NASDAQINDEX: ^IXIC) has soared by around 94% over the same period.
Much of this growth can be attributed to large tech stocks. The AI boom has driven up valuations, and massive companies now account for a historically large share of the market — even more so than during the dot-com bubble of the early 2000s.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »
In many ways, the market is in uncharted territory. Many analysts argue that large stocks are still fairly priced despite record-breaking valuations, making it debatable whether this is a true bubble. That said, some investors are understandably nervous about investing when the S&P 500 is dominated by a handful of tech companies.
Fortunately, history still has some positive news for investors willing to maintain a long-term outlook.
The S&P 500 is becoming incredibly concentrated
In 2000, the S&P 500’s top 10 largest holdings accounted for around 23% of the index’s overall value, according to data from FactSet Research. In 2026, the top 10 stocks make up more than 40% of the S&P 500.
The “Magnificent Seven” — which includes Apple, Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Tesla — collectively make up around one-third of the S&P 500’s value. All of these stocks have a market cap of at least $1 trillion, and AI is a common thread among them.
Because the index is so concentrated, a relatively small number of stocks can significantly influence the S&P 500’s performance.
Since late May 2026, the S&P 500 is down by nearly 3%. However, excluding the Magnificent Seven, the rest of the S&P 500 is actually up by around 2.5% over that period. Tech stocks have been pummeled in recent weeks, largely over concerns around AI spending, and they’ve been dragging the rest of the market down with them.
What history says about what’s coming
To be clear, history can’t predict the market’s future, and each downturn is different. If history can tell us anything, though, it’s that the market is incredibly resilient over the long term.
If AI takes a turn for the worse and the tech industry plunges, it could significantly affect the S&P 500. But this isn’t the first time the S&P 500 has been tested, and it’s still managed to survive every downturn so far.
