The Magnificent 7 vs. the S&P 500
Equal-weight mega-cap basket against the index, indexed to 100
An equal-weight, daily-rebalanced basket of the seven mega-cap technology leaders (AAPL, MSFT, GOOGL, AMZN, NVDA, META, TSLA) plotted against the cap-weighted S&P 500, both indexed to 100 at the common start date. The gap between the two lines is the concentration story of this market cycle — and the reason index investors increasingly own a momentum bet whether they know it or not.
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
When seven names drive a large share of index return, a cap-weighted S&P 500 position concentrates in exactly the stocks that already went up. Diversification by holding 'the market' is weaker than it was a decade ago.
The Nifty Fifty era and the late-1990s tech leadership both produced similar gaps, followed by long periods when the equal-weight market caught up. Leadership rotates; the timing is the hard part.
Unlike 1999, the current mega-cap leaders generate enormous free cash flow. The premium is an earnings story first and a multiple story second — which changes how it can unwind.
Check what your S&P 500 allocation actually owns: if the top seven names are also your largest single-stock positions, your concentration is double-counted. An equal-weight sleeve or a completion index alongside the core position is the cleanest way to keep market exposure while trimming the momentum bet.