Excluding AI infrastructure firms, the S&P 500’s 41% return over two years drops to 16%, highlighting concentration risk in index investing.
AI-related megacap stocks have accounted for nearly all of the S&P 500’s gains over the past two years. The index returned 41% through May 22, 2026, but stripping out AI infrastructure companies reduces that figure to just 16%, a 26-point gap.
NVIDIA (NVDA) surged 102% over the period at 33x trailing earnings, backed by $119B in supply commitments, while AMD (AMD) jumped 181% on a $762B market cap and a 156x forward P/E. The SPDR S&P 500 ETF (SPY) mirrored the broader index’s performance but would have barely outpaced cash without AI exposure.
The concentration risk emerges as 10-year Treasury yields hold at 5%, consumer sentiment hits recessionary levels, and the VIX remains below its 12-month average, raising concerns for passive investors.