Semiconductor Exposure in S&P 500 Hits 18%. That's More Than Double the Tech Bubble Peak.

Semiconductor exposure in major benchmarks has risen sharply, with the semiconductor index’s share of the S&P 500 increasing from 2% to 18% over the past decade. That 18% level exceeds the peak reached during the tech bubble. The increase is driven largely by a small set of companies, especially NVIDIA, whose market size and earnings multiples allow it to move index performance. Similar concentration appears in value and emerging markets benchmarks, where a few chip-related firms account for large portions of index weights. Mid-cap and related holdings also show distortions, with certain companies’ market caps far exceeding the scale implied by index construction.

"“10 years ago, the semiconductor index or weight in the S&P 500 was 2%. Today it's 18%,” she said, adding that “that 18% is more than double what it was at the peak during the tech bubble.”"

"“The math behind that number is almost entirely a function of a handful of names, led by NVIDIA,” with NVIDIA’s market capitalization and valuation multiples described as moving the index, alongside strong recent stock and revenue growth driven by Data Center results."

"“In the value index, the largest weight is Google, and the third largest weight is Micron,” she noted, and “Almost 30%, about 27% of the emerging markets index is from SK Hynix, Samsung, and TSMC,” showing concentration across multiple index types."

"“The most striking distortion shows up further down the cap stack,” where SanDisk is cited as having “a $240 billion market cap for an index that's supposed to cap out at $1.2 trillion,” alongside a very large recent stock run and recent quarterly revenue and earnings figures."

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