Nvidia shares account for more than a third of S&P 500 gains this year

Nvidia stock has continued its impressive rally this year, lifting the AI ​​chip leader’s valuation to more than $3 trillion and making it an even bigger presence in the S&P 500.

In fact, 34.5% of the S&P 500’s market cap gains so far this year can be attributed to Nvidia alone, according to Apollo chief economist Torsten Sløk.

Shares have soared 166% so far this year and are up more than 200% from a year ago. That’s because the AI ​​craze has taken over Wall Street, and Nvidia’s quarterly earnings show no signs that the rush to stock up on AI chips isn’t slowing down.

But relying so much on a single stock also represents a big risk, Sløk warned.

“Such a high concentration implies that if NVIDIA continues to rise, then things are going well,” he wrote in a note on Wednesday. “But if it starts to go down, then the S&P 500 will be hit very hard.”

Because the S&P 500 is weighted by market capitalization, even relatively minor swings from giants like Nvidia, Apple and Microsoft can move the needle on the overall stock market index.

And as retail investors increasingly turn to S&P 500 index funds, that means exposure to Nvidia (for better or worse) is also growing.

“The bottom line is that the extreme concentration of returns in the S&P 500 makes investors more vulnerable to single headlines that affect the single stock driving the index’s returns,” Sløk added.

This is not the first time he has sounded the alarm about the stock market’s dependence on Big Tech.

When Nvidia’s market capitalization surpassed $2 trillion for the first time earlier this year, Sløk compared technology valuations to the bubble seen during the dot-com era.

“The top 10 companies in the S&P 500 today are more overvalued than the top 10 companies during the tech bubble in the mid-1990s,” he wrote at the time.

Others on Wall Street are also becoming more skeptical about Nvidia’s valuation and its attractiveness as an investment after the stock’s epic rally.

But Nvidia stock bulls persist. Beth Kindig, senior technology analyst at the I/O Fund, sees more astronomical gains in the coming years and predicts its market capitalization will more than triple again to $10 trillion by 2030.

Meanwhile, Nvidia CEO Jensen Huang continues to surprise Wall Street, most recently by unveiling a rapid cadence of new AI platforms.

Earlier this month, he said Nvidia plans to update its AI accelerators every year as it announced the Blackwell Ultra chip for 2025 and a next-generation platform in development called Rubin for 2026.

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