Since Jan. 20, 2025, the S&P 500 has risen more than 22% and nearly 48% from April 2025 tariff-driven lows. The rally appears strong, but it is driven disproportionately by a small group of stocks. AI spending is accelerating, with major technology firms projected to spend about $725 billion on AI infrastructure in 2026. That spending is boosting demand for semiconductors used in data centers, AI training, and cloud computing. The PHLX Semiconductor Index has surged, and semiconductor stocks now represent over one-fifth of the S&P 500’s market capitalization. More than half of the S&P 500’s year-to-date gains in 2026 come from five semiconductor companies, indicating a narrow market foundation.
"Bloomberg data shows the S&P 500 has gained 536 points year to date in 2026 - roughly an 8% increase. Yet 51.6% of those gains came from just five semiconductor companies. Regardless of how you look at it, that's a remarkably concentrated market."
Read at 24/7 Wall St.
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