VOO, Vanguard’s S&P 500 ETF, now has nearly 40% of its value in its 10 largest holdings, the highest share since 1965. Nvidia alone accounts for over 8%; tech and AI leaders’ gains drove the concentration, leaving VOO more exposed to their performance.
The seven “Magnificent Seven” stocks—Nvidia, Amazon, Meta, Microsoft, Apple, Alphabet and Tesla—gained 133.5% on average over five years, compared with 55.4% for the S&P 500’s other stocks. The article says continued AI growth could lift them further, but if major AI investments disappoint, returns could suffer. It warns a dot-com-style bust could leave tech-heavy indexes facing a 15-year recovery.
During the previous period of similar concentration, the S&P 500 returned an average 1.2% annually from June 1965 to June 1975, according to S&P data cited in the article. By comparison, VOO’s annualized total return exceeded 15% over the past decade, versus a long-term S&P 500 average near 10%.
