1 in 6 Dollars in the S&P 500 Index Is Now in Semiconductors

If you own an S&P 500 index fund, roughly 1 in 6 dollars is now effectively a bet on the semiconductor industry. Semiconductors now make up ~18% of the S&P 500 index. Ten years ago, that number was ~2%.

This rise wasn't sudden, instead it has been increasing over the past decade. The change was initially driven by a growing demand for chips across cloud computing, data centers, and connected devices around 2016. In 2020, the COVID-era chip shortage highlighted the importance of semiconductors and underscored how central they had become to the global economy.

The arrival of generative AI accelerated this trend. Since ChatGPT's launch in late 2022, the race to build AI infrastructure has driven an increase in chip demand, and with it, the weight of semiconductor companies in the index.

Nvidia sits at the center of the semiconductor sector growth, now the largest weighted company in the semiconductor sector of the S&P 500 Index (as of May 26, 2026). In Q1 2026, Nvidia reported revenue of $68.1 billion, up 73% year-over-year, driven almost entirely by its Data Center business. Nvidia, Broadcom, and Micron now rank as the top three semiconductor holdings in the index (as of May 26, 2026).

This begs the question of what recent semiconductor performance could mean to investors seeking a diversified equity portfolio? What exposures are driving portfolio returns and how concentration risk may be surfacing. We'd love to hear your perspective.

Source: V-Square Quantitative Management LLC, Bloomberg, S&P Global. Chart displays the weight of the S&P 500 Semiconductors industry group within the S&P 500 Index; Semiconductor Equipment Industry Group (GICS Level 2) data retrieved from Bloomberg. Monthly data, May 30, 2003 - May 26, 2026. ChatGPT launch date: November 30, 2022 (OpenAI; history.com).