:max_bytes(150000):strip_icc()/nvidia-a2b1e01b9ba34d9e9290c6bfd1bdac75.jpg "Your S&P 500 Index Fund Might Not Be as Diverse As You Think—And You Can Blame Nvidia for That")
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Key Takeaways
- Nvidia Corp. (NVDA) makes up about 7.3% of the S&P 500, the highest concentration of any one stock in 35 years of data from Leuthold Group.
- Other popular index mutual and exchange-traded funds (ETFs) tell a similar story, with the AI chipmaker very heavily weighted.
- It isn’t just Nvidia. The Magnificent 7 make up roughly a third of the S&P 500.
- Nvidia is responsible for roughly a fifth of the S&P 500’s gains this year, according to a recent report.
Not all S&P 500 companies are created equal. In fact, if you’ve invested in a fund that tracks the S&P 500, you might be surprised how heavily it’s weighted to a single company: Nvidia (NVDA).
With a market capitalization of about $4.2 trillion, Nvidia accounts for 7.3% of the S&P 500’s total valuation of nearly $59 trillion. That’s equal to the bottom 231 companies—nearly half the index—combined. That’s the largest weight for any one company in the past 35 years, according to Leuthold Group data cited by The New York Times.
Other popular funds tell a similar story. Nvidia makes up nearly 7% of the Vanguard Total Stock Market ETF (VTI), over 13% of the Philadelphia Semiconductor Index (SOX), and 16% of the SPDR Technology Select Sector ETF (XLK).
The Magnificent 7, which also includes Alphabet (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), and Broadcom Inc. (AVGO), now makes up more than a third (34%) of the S&P 500 by market cap.
What It Means for Your Portfolio
Market-cap-weighted indexes, such as the S&P 500, consider a company’s valuation (share price multiplied by the number of shares). Nvidia is so heavily weighted because its stock has surged in recent years as demand for AI chips has grown. In other words, when you’re investing in the S&P 500, you’re largely investing in tech stocks.
The Vanguard S&P 500 ETF (VOO) is up close to 10% in 2025, and Nvidia is responsible for about a fifth of those gains, according to an ETF.com report. If this trend continues, Nvidia would account for a fifth of the fund’s total growth for the second consecutive year, the report said.
Many financial advisors have been rethinking how to ensure they’re clients are diversified.
“With the Magnificent 7 stocks comprising such a massive proportion of the S&P 500’s market capitalization, we’ve been exploring ways to still maintain large cap U.S. equity exposure without increasing our Mag 7 exposure,” said David Flores Wilson, a certified financial planner at Sincerus Advisory in New York City. “One way we’ve been doing this is by allocating to equal weight S&P 500 ETFs like Invesco’s Equal Weight ETF (RSP).”
For this year, your returns for RSP would be lower—it has gained about 5.7% in 2025, compared with 8.6% for VOO. However, in years when the tech companies have floundered, it’s looked like a better bet. For example, RSP lost 11.6% in 2022, compared with the 18.2% drop for VOO that year.
The Bottom Line
Nvidia makes up an unprecedented amount of the weighted S&P 500 index. That’s because Nvidia’s stock has surged in recent years, making it the most valuable company on Earth. The chipmaker’s returns have helped lift the S&P 500 as a whole, but it also presents downside risk if its shares were to lose value.
