The S&P 500 is now more concentrated in tech + AI than during the 2000 bubble. Most investors still don’t realize how extreme it is.

A lot of people loaded up on tech stocks and QQQ still don’t seem to grasp how extreme the concentration in the US market has gotten.

Reuters says Information Technology now makes up 39.4% of the S&P 500’s market cap. That’s higher than the peak during the 2000 bubble (around 35%).

But that number is actually understated.

Amazon sits in Consumer Discretionary. Alphabet and Meta are in Communication Services. None of them count toward the official “IT” weighting, even though they’re right at the core of cloud, digital advertising, and the whole AI build-out.

Add those three in and you’re looking at more than 50% of the entire S&P 500 tied to tech/AI mega-caps. That’s never happened before.

So the market right now is basically one giant bet that AI and the demand for compute keep exploding for years. If the CapEx doesn’t eventually turn into enough revenue and cash flow, or if demand just slows down, the whole index is going to feel it hard.

Not saying it’s about to crash tomorrow. Just pointing out the structure is a lot more concentrated than most people realize.

Source: Reuters