Seven Stocks, One Third of the Market
Concentration risk is the quiet fact behind the S&P 500’s recent run. The Magnificent Seven, Apple, Microsoft, Nvidia, Amazon, Meta, Tesla, and Alphabet, now represent about 34% of the index, more than a third. Apple alone sits near 7%. The other 493 companies, sometimes called the Forgotten 493, share the remaining two thirds.
That is an unusually top-heavy market by historical standards. Our Magnificent Seven explainer details who these companies are and how they got so large.
Why Concentration Hurts
When a third of the index sits in seven stocks, the index stops describing the broad economy. It describes seven businesses. A bad quarter from one giant can move the whole benchmark, and a simultaneous stumble, which happened in 2026 with Tesla down 28% and Meta down 10%, drags on everyone else.
For index investors, that means a false sense of diversification. You may own 500 companies, but your returns are largely seven. The same warning shows up in our AI market crash analysis, where a handful of AI names now dominate the cap-weighted index.
Spreading the Risk
The simplest countermeasure is equal weighting. The Invesco S&P 500 Equal Weight ETF, ticker RSP, cuts every holding back to about 0.20% and rebalances quarterly, so no single name can dominate. RSP still owns the Magnificent Seven, just at a fraction of the weight they carry in a cap-weighted fund.
That is the core of Larry Benedict’s Project 2026 pitch: trade reviews under Section 232 and Section 301 could rotate capital out of the giants, and an equal weight fund is positioned to catch the rotation. Our RSP ETF explainer covers the fund and the campaign in full.
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