"The bottom line is that the extreme concentration of returns in the S&P 500 makes investors more vulnerable to single headlines impacting the one stock driving index returns."
Baked into the expectations for Tesla and Nvidia stock are the vision that a single player will dominate a revolutionary industry, facing little competition, virtually in perpetuity.
Given the market’s resiliency and ongoing enthusiasm for artificial intelligence, it might seem silly to snatch defeat from the jaws of victory. Unlike earlier this year, when more stocks were joining the party, megacap tech stocks are firmly back in the driver’s seat. Nvidia’s ascendancy has been an integral part of the market’s new highs.