Key points
- The S&P 500 index is often used as a proxy for the broader U.S. stock market.
- The index includes 500 of the largest publicly traded U.S. companies.
- The 10 biggest names account for more than 30% of the index.
Turn on the financial news, and you’ll be sure to see or hear a reference to the . It is one of the most widely referenced indexes in the U.S. and is used as a barometer for large-cap U.S. stock performance, tracking 500 of the largest publicly traded U.S. companies.
Since the S&P 500 is market cap-weighted, companies are included in proportion to their overall market size, larger companies make up a greater portion of the index. This has become even more apparent as the top 10 stocks in the S&P 500 currently account for more than 30% of the index.
A company must have a market capitalization of at least $18 billion to be included. Here are the largest constituents by their index weightings as of May 2024.
*Data below is from the S&P Dow Jones Indices.
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Top 10 stocks in the S&P 500
1. Microsoft (MSFT)
Index weight: 6.85%.
Market cap:: $2.89 trillion.
Microsoft, the company behind the Windows operating system, could be called the original tech giant. It entered the scene in 1975 and was the tech sector’s golden child in the 1990s. In December 1999, Microsoft reached a valuation of more than $613 billion. Slowing PC sales caused a tumble shortly thereafter, though. After a decline in earnings, Microsoft lost 62% from December 1999 to December 2000.
MSFT joined the S&P 500 in 1994. Its recent year-over-year revenue and earnings per share increases are fueled by the strength of its cloud segment and AI development efforts.
2. Apple (AAPL)
Index weight: 5.85%.
Market cap: $2.47 trillion.
Apple was founded in 1976 by college dropouts Steve Jobs and Steve Wozniak. It’s responsible for the Mac, iPhone, iPad, AirPods, Apple Watch and more. It was the first modern U.S. company to reach a $1 trillion market cap in 2018. It has since become the first to reach $2 trillion in 2020. At one point in January 2022, it even exceeded $3 trillion.
Apple joined the S&P 500 in 1982.
3. Nvidia Corp. (NVDA)
Index weight: 5.05%.
Market cap: $2.13 trillion.
Many companies on this list are involved in artificial intelligence. But only Nvidia holds the distinction of creating the world’s first cloud-based AI supercomputer, Nvidia DGX Cloud. Nvidia began as a 3D graphics company in 1993. It invented the graphics processing unit in 1999 before expanding into AI in 2012. Today, more than 40,000 companies use Nvidia’s AI tech. It also has a big finger in the metaverse pie. Nvidia Omniverse even developed a digital version of Earth to predict the impacts of climate change.
NVDA joined the S&P 500 in 2001.
4. Amazon.com Inc. (AMZN)
Index weight: 3.79%.
Market cap: $1.59 trillion.
The question isn’t what Amazon does but what it doesn’t. The e-commerce retailer provides online shopping galore. It also offers content streaming, electronics like the Kindle, smart devices like Alexa and cloud computing. Its more than 1.7 million small-medium business partners represent over 60% of store sales.
The company went public in May 1997 at an initial public offering price of $18. It climbed to more than $184 in November 2021 before the tech tumble in 2022. It’s been slowly climbing out of that hole, recently surpassing its previous peak in May 2024.
AMZN joined the S&P 500 in 2005.
5. Alphabet Class A (GOOGL)
Index weight: 2.27%.
Market cap: $959 billion.
Alphabet is a technology conglomerate created by Google’s founders. The largest part of the conglomerate is still Google, but other companies are under its umbrella, including health companies Life Sciences and Calico. Google’s founders remain at the helm, with Larry Page and Sergey Brin serving on the company’s board. Google is known for expanding the bounds of technology with 69 consumer products, including its search engine. There are dozens more for businesses and developers.
Search and cloud-based services remain a major part of revenues. Increased revenues resulted in higher-than-expected earnings per share.
GOOGL joined the S&P 500 in 2006.
6. Meta Platforms Class A (META)
Index weight: 2.24%.
Market cap: $946 billion.
Facebook founder and CEO Mark Zuckerberg created Meta in 2021 to expand beyond “the 2D internet world.” His plan is an immersive 3D experience called the metaverse. Zuckerberg envisions you “teleporting” to the office, a concert or your parents’ living room as a hologram. Meta’s role is to help the metaverse come to life and to integrate it into social media.
The company has produced technologies like the virtual reality headset Meta Quest. It also has Ray-Ban sunglasses with built-in cameras and microphones so you can share what you’re seeing. And Meta Horizon Workrooms provide an immersive virtual office for teams to connect from afar.
Meta replaced Facebook in the S&P 500 after Facebook was rebranded as Meta in 2021.
META was added to the S&P 500 in 2013.
7. Alphabet Class C (GOOG)
Index weight: 1.92%.
Market cap: $812 billion.
When Google went public in 2004, Page and Brin wanted to limit voting rights for third parties. They therefore created a corporate structure to limit outside influence over the company’s direction. To that end, they made two share classes. Class A had one vote per share and was offered to the public. Class B, which had 10 votes per share, was held only by company insiders. In 2014, a third class, Class C, was created in a stock split. Class C, which trades under the ticker GOOG, has no voting rights.
Class C shares were added to the S&P 500 immediately following the stock split on April 2, 2014. This resulted in three share classes in the index until Class A was dropped in June 2014.
8. Berkshire Hathaway Class B (BRK.B)
Index weight: 1.71%.
Market cap: $721 billion.
Berkshire Hathaway is known best as Warren Buffett’s investment vehicle. The multinational holding company is based in Omaha, Nebraska, Buffett’s hometown. It traces its history to two 19th-century textile firms: the Hathaway Manufacturing Co. and Berkshire Cotton Manufacturing Company. They became Berkshire Hathaway Inc. in 1955. Buffett’s investment group took control in 1965 and turned it into a holding company for his investments. It began with predominantly insurance companies but quickly built a diversified portfolio. You can even buy Berkshire activewear.
Buffett has remained a proponent of value investing. Today, Berkshire Hathaway has among the highest revenues and share prices of any U.S. company.Buffett and Berkshire’s then-vice chairman Charles Munger created a second class of shares under ticker BRK.B in 1996. They are equivalent to one-fifteen-hundredth of the class A shares. BRK.A trades at more than $625,000 per share, and BRK.B trades at just over $400 per share.
BRK.B joined the S&P 500 in 2010.
9. Eli Lilly & Co. (LLY)
Index weight: 1.47%.
Market cap: $622 billion.
Eli Lilly & Co. may not be as recognizable as the previous eight names, but it deserves to be. In 2024, Ethisphere named the medicine company one of the world’s most ethical companies. Its clinical development pipeline focuses on areas like cancer, diabetes, Alzheimer’s, and pain.
Analysts are optimistic about several of Eli Lilly’s late-stage therapies, such as donanemab for Alzheimer’s disease and pirtobrutinib for leukemia and lymphoma. LLY’s promising pipeline drugs will significantly enhance the company’s existing portfolio of key commercial drugs, which currently drive most of its sales and growth.
LLY is a top performer among the S&P 500 and presents a strong case for booting Telsa out of the Magnificent Seven stocks.
LLY went public in 1952 but didn’t join the S&P 500 until 1970.
10. Broadcom (AVGO)
Index weight: 1.35%.
Market cap: $572 billion.
Chances are you used Broadcom technology to access this article. More than 99% of all internet traffic goes through the company’s tech. The infrastructure technology company has fingers in almost as many pies as Amazon. From smartphones and GPS to Wi-Fi routers and private cloud security, Broadcom operates in many spheres. It’s had more than 60 years to expand its reach.
The company started with LEDs before expanding into fiber optics, semiconductors, optical mouses and more. Today, its products include solutions for Wi-Fi, data centers, financial services, enterprise security, and even cars. It’s been working to expand its AI offerings too. Broadcom Corp. was acquired by Avago Technologies in 2016 to create Broadcom Limited.
AVGO joined the S&P 500 in 2016.
What does the S&P measure?
The S&P 500 measures the performance of the large-cap segment of the U.S. stock market by tracking the performance of 500 of the largest publicly traded U.S. companies. These market giants account for approximately 80% of the total market capitalization, which means the S&P 500 can also be used to indicate the overall market.
The key is knowing it’s intended to emulate the top of the U.S. stock market, not beat it. That’s according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
“If you know which stocks are going to go up, don’t buy the S&P 500,” he said. But research shows even most professional money managers don’t know that making the S&P 500 a great alternative. It has exposure to the largest companies in all 11 sectors of the U.S. stock market.
How are S&P 500 weights calculated?
The S&P 500 index is a market capitalization weighted. This means that companies are included in proportion to their overall market size. “So the larger the company, as defined by the value of all outstanding shares, the larger the weight in the Index,” said Jim Smigiel, chief investment officer at SEI.
This has become even more apparent of late. The top 10 stocks account for more than 30% of the index.
“That’s a very unusual situation,” Silverblatt said. He added that the average weight of the top 10 has been 22% over the past 40 years.
The primary reason to take note of the top-heavy nature is what it could mean. An may cause your portfolio to become overly concentrated in the biggest names. Too much concentration can make your portfolio too dependent on those specific companies.
Frequently asked questions (FAQs)
An index committee chooses the companies. It is composed of experts at S&P Global who analyze the market. They watch how companies move and for any IPOs, Silverblatt said.
To be included in the index, companies must meet the following criteria:
- Domiciled in the U.S.
- Listed on a U.S. exchange.
- It is organized as a corporation and offers common shares of stock.
- Market cap of at least $18 billion.
- Pass a liquidity test to ensure large investors can easily trade their stock.
- Be a leading company in its industry.
- Have real assets, real sales or real R&D products.
The index committee then chooses companies within each industry so the index reflects the broader stock market. “If the market is 26% tech, we have 26% tech,” Silverblatt said.
Index weights are updated each quarter after market close on the third Friday in March, June, September, and December. Turnover is not as large as you may suspect, Silverblatt said. These rebalances only affect about 0.8% of the index’s market capitalization.
Constituent changes can happen anytime, however. Since 1995, around nine in ten such changes have occurred outside of quarterly rebalances.
A company may be removed from the S&P 500 for two reasons. The first is if another company buys it. Silverblatt called this an “involuntary change,” and it’s the biggest reason for removal. “A buys B, so we have to put a new company in,” he said.
The second reason is a voluntary change in the index committee’s analysis. This occurs if it has been determined the market has changed. For example, a new issue has grown or a current constituent needs to do better in terms of market value, Silverblatt said.
The easiest way to invest in the S&P 500 is through an index fund or ETF. Many mutual and exchange-traded funds (ETFs) are linked to the S&P 500.
One of the largest is the SPDR S&P 500 ETF (SPY), with around $532 billion in total assets. The Fidelity 500 Index (FXAIX) has roughly $512 billion. Then there’s the iShares Core S&P 500 ETF (IVV), with more than $465 billion in total assets. Finally, the Vanguard 500 Index Fund (VOO) has around $455 billion in total assets.
You cannot buy shares in the S&P 500 index itself. But you can do the next best thing by purchasing shares in an S&P 500-linked product. S&P 500 index mutual funds and ETFs hold the same companies as the index. So purchasing the SPDR S&P 500 ETF Trust (SPY) or Fidelity 500 Index (FXAIX) is essentially purchasing the S&P 500.
