The rally that has driven the S&P 500 up 14% this year to record highs is masking the fact that more than 4 in 10 stocks in the index are lower in 2026, as the gains are concentrated in a few chipmakers and other AI-related heavyweights.
The gap between the benchmark and its average member highlights how much of Wall Street’s rally rests on a handful of companies as the US bull market nears a four-year anniversary. Memory-chip makers Sandisk and Micron Technology have more than tripled, while the median S&P 500 stock has gained barely 4% in 2026, according to a Reuters analysis of LSEG data.
By contrast, over 200 companies within the S&P 500 have fallen in 2026, with a quarter of the index down 11% or more.
The analysis covers current S&P 500 members, excluding 18 companies removed from the index in 2026, some demoted to smaller capitalization indexes after their stocks fell.
The S&P 500’s rally in 2026 puts it on track for its fourth straight year of gains, fueled most recently by explosive earnings growth from AI-related companies, even as profit expansion in other sectors remains tepid.
The Federal Reserve’s September interest-rate hike and expectations of more rate increases to come have raised concerns about the broader economy’s resilience and dented demand for industrials, consumer goods sellers and real estate companies.
“Anything outside of the AI trade or companies that benefit from higher energy prices face huge headwinds in the form of higher oil and higher yields,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky. “The Fed has killed a lot of bull markets in the past, and if we get into an aggressive rate-hike cycle, that will be tough to stomach.”
While worries about higher interest rates explain some of the poor performance of many US stocks, the allure of AI-related companies means other kinds of stocks go ignored by investors, said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“AI is such a powerful story. I don’t think I’ve ever had as narrow a portfolio, in terms of themes, as I have now. I certainly own some non-AI names, but not many,” Ghriskey said. “It’s such a strong story that it just attracts managers and assets. There will be some rotation away at some point, but then I expect it to come back.”
Eight of 11 S&P 500 sector indexes are up this year, led by a 42% jump in energy and a 32% surge in technology. However, because of its sheer size, technology is responsible for over 10 percentage points of the S&P 500’s gain, while the energy sector’s contribution amounts to less than 1%.
“We continue to favor large-cap quality, particularly asset light names with improving EPS revisions. We would add riskier stocks over the next month if the index comes down to finish what has been a multi-month correction under the surface,” Morgan Stanley strategists wrote in a recent report.
AI chipmaker Nvidia, the world’s most valuable company, has contributed almost 2% to the benchmark’s gain this year, followed by contributions of over 1% each from Apple, Micron and Advanced Micro Devices.
Tesla’s 15% dip this year has subtracted about 0.3% from the S&P 500’s rally.
Fewer than half of current S&P 500 companies are trading above their 200-day moving averages, suggesting a weak trendline for those names. A week ago that rate was at 40%, lowest since May 2025.
