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

Not all S&P 500 corporations are created equal. The truth is, when you’ve invested in a fund that tracks the S&P 500, you is likely to be shocked 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 complete valuation of almost $59 trillion. That’s equal to the underside 231 corporations—almost half the index—mixed. That’s the most important weight for anyone firm prior to now 35 years, in keeping with Leuthold Group knowledge cited by The New York Instances.

Different standard 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, think about 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 lately 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 liable for a few fifth of these good points, in keeping with an ETF.com report. If this pattern continues, Nvidia would account for a fifth of the fund’s complete development for the second consecutive yr, the report stated.

Many monetary advisors have been rethinking how to make sure they’re shoppers 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 keep massive cap U.S. fairness publicity with out rising our Magazine 7 publicity,” stated David Flores Wilson, a licensed 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 yr, your returns for RSP could be decrease—it has gained about 5.7% in 2025, in contrast with 8.6% for VOO. Nevertheless, in years when the tech corporations have floundered, it is appeared like a greater wager. For instance, RSP misplaced 11.6% in 2022, in contrast with the 18.2% drop for VOO that yr.

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 lately, making it probably the most precious firm on Earth. The chipmaker’s returns have helped carry the S&P 500 as an entire, nevertheless it additionally presents draw back danger if its shares had been to lose worth.