Forty-Five Percent, Against a Record of Twenty-Seven
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18 SEPTEMBER 2026
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Three Numbers to Start
45% | of the S&P 500 is now AI-linked, by Goldman’s count. The previous concentration record was 27%. |
~50% | of the index’s earnings growth is attributable to AI spending, per a Goldman note published this week. |
8% | Nvidia’s weight in the index on its own, crossed in the first quarter. |
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Forty-Five Percent, Against a Record of Twenty-Seven
The index most people hold as their safe, diversified allocation has changed shape, and the figures are published rather than inferred.
Goldman Sachs and Deutsche Bank both put AI-linked companies at roughly 45% of S&P 500 market capitalisation. Nvidia alone crossed 8% index weight in the first quarter. The Magnificent Seven together account for about 35%.
At the dot-com peak in March 2000 the top ten stocks represented roughly 27% of the index. Today’s concentration exceeds that by a wide margin.
Which means a broad index fund is no longer doing the job most people bought it for. Someone holding an S&P tracker owns a portfolio in which nearly half the value depends on one theme, and they did not choose that allocation. It happened around them.
This week Goldman added the figure that matters more. Roughly half of all S&P 500 earnings growth is now attributable to AI spending.
Read that as a dependency rather than an achievement. The earnings growth holding up the index rests on the capital expenditure budgets of a handful of companies, decided quarterly by people who can change their minds.
The Part That Makes It Circular
The mechanism underneath is the one worth understanding, because it is not visible in any headline figure.
Nvidia announced a deal to invest up to $100 billion in OpenAI over ten years, with OpenAI committing to purchase ten gigawatts of infrastructure. The chipmaker funds the customer; the customer buys the chips.
That arrangement has a name in accounting: vendor financing. It is legal, it is disclosed, and it was widely used by telecom equipment makers in the late 1990s. Lucent and Nortel both lent heavily to the carriers buying their switches, and both discovered what happens when the borrower cannot pay.
Michael Burry, who is short Nvidia and Palantir, has compared the practice to Enron. That comparison is his and it is contested. The underlying fact is not: a supplier is financing its own demand.
There is a detail in Nvidia’s own filing that most coverage skipped. Its November quarterly report stated that “there is no assurance that we will enter into definitive agreements” with the announced partner. The deal was announced, priced into expectations, and remains unsigned.
When the same dollar moves from chipmaker to model developer to cloud provider and back to chips, it can be recorded as revenue at more than one stop. The aggregate figure describes less underlying activity than it appears to.
sponsored The S&P Is a Tech Fund in Disguise |
For decades, Americans were told the S&P 500 was the safe, diversified choice. But something changed. The S&P is no longer a diversified basket of American business. It's a tech fund in disguise. Goldman Sachs reports: Today, AI focused stocks make up 45% of the entire index. One company, Nvidia, carries as much sway in the S&P 500 as the bottom 224 stocks combined. And right now these tech companies are pouring hundreds of billions of dollars into AI data centers. But for every dollar they spend, they're only making pennies back. What's worse, much of this spending is circular. Nvidia sells chips to OpenAI. OpenAI spends that money with Microsoft. Microsoft buys more chips from Nvidia. The same dollar gets counted as growth two or three times. We have seen this movie before. The railroads in the 1800s. The telephone companies in the 90's. The dot-com crash in 2001. Everyone builds too much, too fast — betting on a future that takes longer to arrive than the money can survive. Michael Burry, famous for calling the 2008 crash, says this looks just like 2001. When that bubble burst, the tech-heavy Nasdaq collapsed. It took 15 years to recover. That is why so many Americans are moving to physical gold. Gold is not tied to the stock market. It is not tied to AI hype. And when markets collapse, gold has historically done the opposite. When the dot-com bubble burst — gold went up. When the 2008 crisis wiped out trillions — gold went up. When the 2020 panic hit — gold hit all-time highs. You don't have to leave your retirement exposed to the AI bubble. Thousands of Americans are using a little-known IRS-approved rollover to move a portion of their retirement savings into physical gold. Click here to learn how to move your retirement into gold — tax-deferred and penalty-free. This is how you protect it. Sincerely, Anchor Point Research P.S. In 2020, 11% of Americans owned gold. In 2026, that number has skyrocketed to 38%. See why smart money is moving before the bubble bursts. → Get the free Retirement-to-Gold Guide |
What Is Genuinely Different From 2000
The comparison to the dot-com peak is made constantly and it is only half right, which makes it worth being precise about.
The concentration is worse. Forty-five percent against twenty-seven. On that measure this market is more concentrated than any modern precedent, including 1929 and the Nifty Fifty in 1973.
The valuations are not. Cisco traded at around thirty times sales at the 2000 peak. Today’s AI leaders trade at materially lower multiples of revenue, and unlike the dot-com cohort they generate substantial cash.
And the revenue is real. Nvidia sells physical hardware to buyers with functioning balance sheets. Pets.com sold pet food below cost.
So this is a concentrated market of profitable companies rather than a concentrated market of unprofitable ones. That is a better starting position and it does not remove the arithmetic problem.
The arithmetic problem is that historical concentration episodes — 1929, 1973, 2000 — each corrected between 40% and 80% within two years of peaking. Profitability changed how far the fall went. It did not prevent one.
What You Can Actually Do With This
Check what you own rather than what it is called. An S&P 500 fund and a technology fund now overlap far more than the labels suggest. Holding both is a concentrated position described as diversification.
The equal-weight version of the same index exists. It holds the identical 500 companies at identical weights, which removes the concentration without removing the market. It has underperformed for three years, which is precisely why it is cheap relative to the cap-weighted version now.
And look at what is outside the index entirely. International equities, value, energy, healthcare and consumer staples have historically outperformed during mega-cap unwinds, for the mechanical reason that money leaving one place has to arrive somewhere.
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What is Scheduled
Oct | the next Fed meeting. Goldman expects it to be skipped, given proximity to the midterms. |
Dec | where the committee’s own projections point for the next increase, after Wednesday’s rise. |
3.75% | the bottom of the new target range, after the first hike since 2023 and a unanimous vote. |
Wednesday’s decision is worth carrying into this. Higher rates raise the discount applied to earnings expected far in the future, and the AI trade is built almost entirely on earnings expected far in the future.
That is the link between the two stories in this letter, and it is the one that will decide how the fourth quarter goes.
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Forty-Five Against Twenty-Seven
45% | the AI-linked share of the S&P 500, against a previous concentration record of 27% set in March 2000. Anyone holding a broad index fund owns that allocation whether or not they chose it, and roughly half the index’s earnings growth now rests on the same spending. |
Forget the hot picks — protect what you’ve already built, and check what your index fund actually holds before you call it diversified. Because the best trade you’ll ever make is the loss you never took. Mike LeeDeals CatchersThanks for reading. Have a good weekend. |
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