The biggest companies in the S&P 500 are growing faster in market value than in actual earnings — and that imbalance is starting to make some strategists uneasy.
Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, has long pushed back against the idea that the U.S. stock market is in an AI-fueled bubble. But in her latest report shared with MarketWatch, she highlighted a chart that’s giving her pause.
It shows the combined weighting of the 10 largest stocks in the S&P 500 hitting a record high above 44% — the highest level since at least 1990 — even though those same companies generate just 34.3% of the index’s total net income. In other words, their market clout has outpaced their share of profits.
“While we’ve generally not agreed with the view that the market is in an AI bubble like the old TIMT era, the risk has grown,” Calvasina wrote, referring to the Technology, Internet, Media, and Telecommunications bubble of 2000.
AI giants dominate today’s top 10 list: Nvidia, Meta, Broadcom, Microsoft, Amazon, Alphabet (both share classes), Apple, and Tesla — with Berkshire Hathaway as the lone non-AI heavyweight. Investors have been piling into these names, betting that artificial intelligence will supercharge long-term growth.
The trend isn’t new. Since 2021, the largest firms’ weight in the index has risen faster than their profit contribution. But the gap has recently widened at an accelerated pace — now just shy of the 10.3 percentage-point spread last seen during the dot-com bubble in March 2000.
That widening gap has reignited bubble concerns, especially as “hyperscalers” like Amazon and Meta report massive AI spending plans. Meta’s stock tumbled last week, wiping out more than $200 billion in market value after analysts downgraded it over its heavy AI investments.
Even so, strength in other AI leaders — especially Amazon — helped lift the broader market. Stocks ended last week higher for a third straight time, and Monday’s news that Amazon struck a cloud deal with OpenAI added fresh momentum.
By the close, the S&P 500 and Nasdaq logged gains, while the Dow and Russell 2000 slipped slightly — a sign that the market’s strength still leans heavily on its biggest, most AI-driven players.
