To The Moon

U.S. stock indexes keep pushing toward new highs, but the number of stocks actually making money for investors may be much smaller than you think.

According to Reuters, citing LSEG data on October 12, the S&P 500 has gained roughly 14% year to date, yet more than 200 of its constituents are still trading lower, with about a quarter down 11% or more. Even more striking, the median return among S&P 500 stocks is only around 4%. In other words, the index looks like it is enjoying a strong bull market, but investors who missed a handful of major winners may have significantly underperformed.

The more interesting question is not whether the market has risen too much, but why so much of the rally is concentrated in AI and semiconductor stocks.

SanDisk and Micron have each surged more than 200% this year, while AI-related companies such as NVIDIA and AMD have also contributed to the market's strength. The technology sector has gained roughly 32%, contributing more than 10 percentage points to the S&P 500's overall advance. Energy, meanwhile, has risen about 42%, but its contribution to the index remains below one percentage point because of its much smaller weight.

This highlights an important feature of market-cap-weighted indexes. The S&P 500 does not give every company equal influence. Larger companies carry more weight, which means a rally in a handful of megacap technology stocks can keep pushing the index higher even when hundreds of other stocks are struggling.

A strong index does not necessarily mean a strong market — and it certainly does not mean most investors are making money.

AI is not the only reason behind this divergence. Interest rates also matter. With the Federal Reserve resuming rate hikes in September and Treasury yields remaining elevated, sectors such as industrials, consumer businesses and real estate face greater financing pressure. Meanwhile, leading AI companies often have stronger cash flows and faster earnings growth, making them more attractive to investors willing to pay for growth.

The result is a self-reinforcing cycle. Strong AI earnings attract capital, rising stock prices increase market capitalization, and larger index weights allow those same companies to drive an even greater share of overall market performance. Meanwhile, companies outside the AI trade can remain overlooked, even when their valuations appear more reasonable.

But there is a risk here. Fewer than half of S&P 500 constituents are currently trading above their 200-day moving averages. That suggests the broader market's underlying momentum is considerably weaker than the headline index implies. The more the rally depends on a small group of companies, the more vulnerable the overall index may become if their earnings expectations or valuations begin to weaken.

Still, a narrow market does not automatically mean the bull market is about to end. Strong companies can dominate returns for extended periods, particularly when their earnings genuinely outperform. The bigger concern is whether investors are pricing increasingly ambitious future growth into an increasingly concentrated group of stocks.

Tiger View

Tiger thinks the most important question now is not whether the S&P 500 can reach another record high.

It is whether this rally can broaden beyond a handful of AI leaders.

AI is clearly generating substantial earnings growth, but that strength has not translated into equally broad gains across the market. This creates two different risks for investors. Without exposure to leading AI stocks, portfolios may continue lagging the index. But concentrating too heavily in those same names could leave investors exposed to a sharp reversal if growth expectations are revised lower.

Tiger would watch three signals next: whether the equal-weight S&P 500 begins outperforming the market-cap-weighted index, whether the percentage of stocks above their 200-day moving averages starts recovering, and whether earnings expectations improve in sectors outside AI and semiconductors during the upcoming earnings season.

If the next phase looks like:

AI leaders keep growing → earnings improve across other sectors → more stocks participate in the rally,

then this bull market could become broader and more sustainable.

But if the pattern becomes:

A few AI giants keep lifting the index → most stocks remain weak → earnings expectations for market leaders begin to soften,

then the seemingly strong market could be more fragile than investors realize.

So the real question is no longer simply:

“How much higher can the S&P 500 go?”

It is:

“If you removed the biggest AI winners, how much of this bull market would actually remain?”

Related Stocks

Broad U.S. Market: $SPDR S&P 500 ETF(SPY)$SPDR S&P 500 ETF Trust(SPY)$

Watch: how much of the index's performance is driven by a small number of megacap technology stocks.

Equal-Weight S&P 500: $Invesco S&P 500 Equal Weight ETF(RSP)$Invesco S&P 500 Equal Weight ETF(RSP)$

Watch: whether market participation begins broadening beyond the largest companies. The relative performance of RSP versus SPY is particularly useful here.

AI Compute: $NVIDIA(NVDA)$, $Advanced Micro Devices(AMD)$Advanced Micro Devices(AMD)$

Watch: whether AI infrastructure demand and earnings growth continue to justify premium valuations.

AI Memory & Storage: $Micron Technology(MU)$$, $SanDisk(SNDK)$SanDisk Corp.(SNDK)$

Watch: whether strong memory demand continues translating into earnings growth after the sector's substantial rally.

Technology: $Invesco QQQ(QQQ)$

Watch: whether concentration among major technology names amplifies volatility if AI earnings expectations begin to weaken.

Today's Poll

The S&P 500 is up 14%, but more than 40% of its stocks are down. What happens next?

① AI leaders keep outperforming and indexes push to new highs

② The rally broadens as other sectors start catching up

③ Market concentration is too high, raising the risk of an AI-led correction

④ Forget the index — focus on companies delivering real earnings growth

For market discussion only. This is not investment advice. Markets involve risk, and investment decisions should be made carefully.

Source: Reuters, October 12, 2026, citing LSEG market data. Figures reflect the index constituents covered in the report and exclude 18 companies removed from the index during the year.