S&P 500 index fund owners now hold more Nvidia than Apple

If you own an S&P 500 index fund, congratulations: you’re now a bigger Nvidia shareholder than an Apple shareholder. Whether you meant to be or not. As of August 21, Nvidia commands a 7.55% weighting in Vanguard’s VOO, the most popular S&P 500 exchange-traded fund in the world. Apple sits just below at 7.05%. The Magnificent Seven problem Nvidia’s coronation as the largest S&P 500 constituent is really just one data point in a much larger story about concentration risk. The so-called Magnificent Seven, which now consists of Nvidia, Apple, Microsoft, Amazon, Alphabet, Meta, and Broadcom, collectively account for roughly 32.7% of the entire S&P 500 as of early August. For passive investors, this creates a structural issue that most don’t think about until it’s too late. When you buy a “diversified” index fund, you’re actually making a heavily concentrated bet on a handful of tech giants. The S&P 500 is market-cap weighted, meaning the bigger a company gets, the more of your money goes into it. Nvidia’s peak single-stock weighting in the S&P 500 has reached somewhere in the 7% to 8% range, which represents the highest level for any individual stock in modern re...