Your S&P 500 Index Fund May Not Be as Numerous As You Assume—And You Can Blame Nvidia for That

Not all S&P 500 firms are created equal. The truth is, if you happen to’ve invested in a fund that tracks the S&P 500, you is perhaps stunned how closely it’s weighted to a single firm: Nvidia (NVDA).

With a market capitalization of about $4.2 trillion, Nvidia accounts for 7.3% of the S&P 500’s whole valuation of almost $59 trillion. That’s equal to the underside 231 firms—almost half the index—mixed. That’s the most important weight for anybody firm up to now 35 years, in response to Leuthold Group knowledge cited by The New York Instances.

Different common funds inform the same story. Nvidia makes up almost 7% of the Vanguard Whole Inventory Market ETF (VTI), over 13% of the Philadelphia Semiconductor Index (SOX), and 16% of the SPDR Expertise Choose Sector ETF (XLK).

The Magnificent 7, which additionally consists of Alphabet (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), and Broadcom Inc. (AVGO), now makes up greater than a 3rd (34%) of the S&P 500 by market cap.

What It Means for Your Portfolio

Market-cap-weighted indexes, such because the S&P 500, take into account an organization’s valuation (share worth multiplied by the variety of shares). Nvidia is so closely weighted as a result of its inventory has surged in recent times as demand for AI chips has grown. In different phrases, whenever you’re investing within the S&P 500, you are largely investing in tech shares.

The Vanguard S&P 500 ETF (VOO) is up near 10% in 2025, and Nvidia is chargeable for a few fifth of these beneficial properties, in response to an ETF.com report. If this development continues, Nvidia would account for a fifth of the fund’s whole progress for the second consecutive 12 months, the report stated.

Many monetary advisors have been rethinking how to make sure they’re purchasers are diversified.

“With the Magnificent 7 shares comprising such a large proportion of the S&P 500’s market capitalization, we’ve been exploring methods to nonetheless preserve giant cap U.S. fairness publicity with out growing our Magazine 7 publicity,” stated David Flores Wilson, an authorized monetary planner at Sincerus Advisory in New York Metropolis. “A method we’ve been doing that is by allocating to equal weight S&P 500 ETFs like Invesco’s Equal Weight ETF (RSP).”

For this 12 months, your returns for RSP can be decrease—it has gained about 5.7% in 2025, in contrast with 8.6% for VOO. Nevertheless, in years when the tech firms have floundered, it is appeared like a greater guess. For instance, RSP misplaced 11.6% in 2022, in contrast with the 18.2% drop for VOO that 12 months.

The Backside Line

Nvidia makes up an unprecedented quantity of the weighted S&P 500 index. That is as a result of Nvidia’s inventory has surged in recent times, making it essentially the most useful firm on Earth. The chipmaker’s returns have helped elevate the S&P 500 as an entire, nevertheless it additionally presents draw back danger if its shares have been to lose worth.