Buy the most popular index fund in the world and you own 520 companies. You also, as of 30 June, have 7.50% of your money in one of them.
That company is Nvidia, and it reports fiscal second-quarter results after the close on Wednesday, 26 August. Apple — which sat at the top of the S&P 500 for most of the past decade — is now second in the Vanguard S&P 500 ETF at 6.58%. Microsoft is 4.29%, Amazon 3.61%, Alphabet’s Class A shares 3.24%. Those five positions come to 25.22% of the fund’s $1.05 trillion. Count both of Alphabet’s share classes and the top five companies hold close to 28% of every dollar in it.
None of that was a decision. A market-cap-weighted index does not pick winners, it ratifies them. Nvidia first passed Apple’s market value on 5 June 2024 — about $3.02 trillion against $2.99 trillion — and is now worth roughly $5.3 trillion to Apple’s $4.5 trillion. Apple did not shrink. Nvidia outgrew it, and the index let the position swell.
The arithmetic nobody signed up for
The fund’s 10 largest positions are 36.33% of assets. The other 510 split the remaining 63.67% — an average of roughly 0.12% each. On a $10,000 stake that is about $12 per position outside the top 10, against roughly $750 in Nvidia alone and $658 in Apple.
Which makes Wednesday an index event rather than a stock event. Nvidia guided to about $91 billion in revenue for the quarter that ended in late July; consensus sits a shade above that. A 20% decline in the shares would, all else equal, take roughly 1.5% off the entire fund by itself — before any read-across to Broadcom at 2.77%, or to Micron, which climbed into the top 10 at 2.01% on the same AI demand lifting the names above it. The concentration is not just in one ticker. It is in one supply chain.
It lands in a week already carrying weight. All three major US indexes finished last week lower despite Friday’s bounce — the Dow up 517.80 points to 53,277.01, the S&P 500 up 0.4% to 7,674.37, the Nasdaq up 0.4% to 26,180.45 — after a bond selloff that pushed the 30-year Treasury yield to its highest level since 2007. Nvidia shares closed Friday at $214.72, down 1.0% on the day and well inside a 52-week range of $164.07 to $236.54. Fed chair Kevin Warsh delivers his first Jackson Hole keynote on 28 August, two days after Nvidia speaks.
Our take: Concentration is not a defect in a market-cap index. It is the mechanism working, and it self-corrects — if AI leadership fades, the index demotes today’s giants one session at a time, without a single trade, at a 0.03% expense ratio. The thing worth knowing is what the label now covers. “I own the whole US market” and “a quarter of my money is in five AI-linked companies” have quietly become the same sentence. Most people holding the second one still think they said the first.
What to watch
- Guidance, not the beat. The quarter is largely priced. The outlook and the commentary on the Blackwell ramp are what move the index on Thursday morning.
- The read-across names. Broadcom and Micron sit in the same top 10 for the same reason. A guidance wobble does not stay in one line item.
- Whether bonds stay in charge. Last week the long end, not earnings, set the tone. If the 30-year keeps climbing, a strong Nvidia print may not be enough to lift the tape.
- Warsh on Friday. The new chair’s first Jackson Hole keynote arrives 48 hours after the largest position in the index has spoken. Two concentrated events, one week.
Nothing here is a call on the shares. It is a description of what a passive US equity holding has become: a broad-market fund whose single biggest input reports on a Wednesday afternoon in August.