The S&P 500 (SNPINDEX: ^GSPC) is composed of 500 stocks from 11 different sectors, including information technology, energy, financials, and real estate. While it is the most diversified of the major U.S. stock market indexes, a select few technology stocks are having a growing influence over its performance thanks to their meteoric rise in value.
As of this writing, the following five companies have a combined market capitalization of $12.5 trillion, accounting for 27.3% of the total value of the entire S&P 500:
Microsoft (NASDAQ: MSFT) has a market cap of $3.2 trillion.
Apple (NASDAQ: AAPL) has a market cap of $2.9 trillion.
Nvidia (NASDAQ: NVDA) has a market cap of $2.8 trillion.
Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) has a market cap of $2.2 trillion.
Amazon (NASDAQ: AMZN) has a market cap of $1.9 trillion.
The S&P 500 index is up 11.5% in 2024 so far. However, the S&P 500 Equal Weight Index — which assigns an equal weighting to every stock regardless of its market cap — is up just 4.9%. The difference can be explained (in large part) by the average year-to-date gain of 26.3% in the above five stocks, which highlights their influence over the performance of the S&P 500.
Each of the five companies has a track record of success spanning decades, and they are using that experience (and their vast financial resources) to dominate new industries like artificial intelligence (AI). If they succeed, they could become even more influential over the S&P 500.
1. Microsoft: 7.2% of the S&P 500
Microsoft is the world’s largest company. It was founded in 1975, and some of its flagship products like Windows and Word are still used by billions of people today. Microsoft has expanded beyond software and into gaming, hardware (computers and devices), internet search, cloud computing, and now, AI.
At the beginning of 2023, the company agreed to invest $10 billion in AI start-up OpenAI, which created the ChatGPT online chatbot. Microsoft is integrating OpenAI’s technology into most of its products to deliver more value for users. The Bing search engine, for example, now features a…
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