The Standard & Poor's 500 Index, or simply the , is a market-capitalization-weighted index of 503 large-cap U.S. stocks. The index accounts for 80% of the market value of the U.S. equities market. Because it reflects nearly all of the largest stocks in the U.S., it is often regarded as synonymous with the market as a whole. It's the closest there is to a default U.S. stock index.
Because it's weighted by market cap, the largest stocks have a big impact on both the long-term performance and daily movement of the index. The 10 biggest stocks make up 30.9% of the index's market value as of Aug. 31, 2023. This means that investors should familiarize themselves with these 10 giant components to understand what drives the broader market.
Below is our analysis of the 10 largest components of the S&P 500. Weightings are as of Sept. 22, 2023, and market capitalizations are as of Sept. 25, 2023. The trailing 12-month (TTM) figures for revenue and net income are courtesy of TradingView and are as of June 30, 2023, unless otherwise stated.
Key Takeaways
- The S&P 500 index is a market capitalization-weighted index of the biggest large-cap companies in the United States.
- The index is synonymous with the stock market in the United States because it contains virtually all of the country's largest stocks.
- The largest stocks greatly impact the index's long-term performance and daily movement.
- Apple, Microsoft, and Amazon are the top three stocks in the index.
- Other companies in the S&P 500's top 10 list include NVIDIA, Alphabet, Berkshire Hathaway, Meta (formerly Facebook), UnitedHealth, and Tesla.
1. Apple (AAPL)
- Index Weighting: 7.10%
- Market Cap: $2.75 trillion
- Revenue (Trailing 12-Month): $383.93 billion
- Net Income (Trailing 12-Month): $94.76 billion
Apple is a major producer of hardware and software products, primarily for the consumer market. Its most prominent product is the Apple iPhone brand, but Apple also produces other brands including Mac computers and iPad tablets. It also operates the Apple Music and Apple TV media distribution platforms.
2. Microsoft (MSFT)
- Index Weighting: 6.51%
- Market Cap: $2.36 trillion
- Revenue (Trailing 12-Month): $211.91 billion
- Net Income (Trailing 12-Month): $72.36 billion
Microsoft is a computer hardware and software company that makes products for both personal and enterprise use. A major player in the tech industry for decades, Microsoft is best known for its Windows operating system, the Microsoft Office suite of programs, and the Xbox game system. The company also is a major player in cloud computing services with its cloud platform, Azure.
3. Amazon (AMZN)
- Index Weighting: 3.24%
- Market Cap: $1.35 trillion
- Revenue (Trailing 12-Month): $538.05 billion
- Net Income (Trailing 12-Month): $13.07 billion
Amazon is an online retailer of all kinds of goods but has increasingly diversified its business. It also has a major cloud-computing business known as Amazon Web Services and runs the Whole Foods chain of brick-and-mortar grocery stores.
Founder and long-time chief executive officer (CEO) Jeff Bezos stepped down as CEO of the company on July 5, 2021, to become executive chair of the company. He was replaced by Andrew Jassey, who previously served as CEO of Amazon Web Services.
4. NVIDIA (NVDA)
- Index Weighting: 2.84%
- Market Cap: $1.04 trillion
- Revenue (Trailing 12-Month) as of July 31, 2023: $32.68 billion
- Net Income (Trailing 12-Month) as of July 31, 2023: $10.32 billion
NVIDIA is a company that develops and manufactures Graphics Processing Units (GPUs). GPUs are a type of computer chip used for creating computer graphics, usually for visual design or computer gaming. But GPUs are increasingly in demand for other tasks such as cryptocurrency mining, artificial intelligence (AI), and machine learning development. NVIDIA is known for its GeForce brand of consumer GPUs.
5. Alphabet Class A (GOOGL)
- Index Weighting: 2.14%
- Market Cap: $1.66 trillion
- Revenue (Trailing 12-Month): $288.14 billion
- Net Income (Trailing 12-Month): $60.95 billion
Alphabet is the parent company of search engine giant Google. Besides the Google search engine, Alphabet runs a number of other services, including the video-sharing site YouTube.
It's notable that the company splits its stock into two main share classes:
- The A shares usually trade for slightly more than the C shares and carry voting rights.
- The C shares are nonvoting shares, meaning they do not entitle the holder to participate in proxy votes.
Each trades on the S&P 500. On their own, they are large enough to make the top 10 list. If counted together, they would place Alphabet third on this list and would make up 3.88% of the index.
6. Tesla (TSLA)
- Index Weighting: 1.87%
- Market Cap: $784 billion
- Revenue (Trailing 12-Month): $94.03 billion
- Net Income (Trailing 12-Month): $12.23 billion
Tesla is primarily a maker of electric cars. It makes more than 90% of its revenue and virtually all of its profit from its car business, but it also sells solar panels and batteries for homes and businesses.
7. Meta Platforms Class A (META)
- Index Weighting: 1.84%
- Market Cap: $774 billion
- Revenue (Trailing 12-Month): $120.52 billion
- Net Income (Trailing 12-Month): $22.54 billion
Meta Platforms, previously Facebook,runs the largest, most dominant social networking platform in the world. It alsoownsthe photo-sharing app Instagram, the messenger app WhatsApp, and the virtual reality equipment Meta Quest.
8. Alphabet Class C (GOOG)
- Index Weighting: 1.83%
- Market Cap: $1.66 trillion
- Revenue (Trailing 12-Month): $288.14 billion
- Net Income (Trailing 12-Month): $60.95 billion
(See above for company description)
Alphabet also has B shares. This class has disproportionate voting rights and is only held by Google insiders. The B shares do not trade on the open market.
9. Berkshire Hathaway (BRK.B)
- Index Weighting: 1.81%
- Market Cap: $789 billion
- Revenue (Trailing 12-Month): $333 billion
- Net Income (Trailing 12-Month): $86.89 billion
Berkshire Hathaway is a holding company for the various investments CEO Warren Buffett has made over the years. Among its numerous holdings are insurance businesses such as GEICO, large energy and utilities businesses, a major railroad, consumer brands such as ice cream chain Dairy Queen, and manufacturers such as aerospace parts manufacturer Precision Castparts Corp. It also owns an enormous portfolio of equities.
10. UnitedHealth Group (UNH)
- Index Weighting: 1.30%
- Market Cap: $473 billion
- Revenue (Trailing 12-Month): $348.51 billion
- Net Income (Trailing 12-Month): $21.11 billion
UnitedHealth Group is a health insurance and pharmacy benefit management (PBM) corporation. It operates its PBM as well as additional healthcare services such as health-related data analytics under its Optum brand.
How Can I Invest in the S&P 500?
There are several ways that you can invest in the S&P 500. Many investment companies have some type of investment that tracks the index. Some of the most common ways to invest in the company (without having to buy the stocks of the individual companies listed on the index) include purchasing shares in mutual funds or exchange-traded funds (ETFs). ETFs are like stocks because they trade on stock exchanges and are more cost-effective because of the lower fees associated with them. Do your research or talk to an investment professional who can help you navigate through all the options.
Can I Buy Shares in the S&P 500?
No, you cannot buy shares or invest directly in the S&P 500. That's because it is an index that is made up of some of the largest companies in the United States. But you can invest in vehicles that track the index. Index funds and ETFs try to mimic the composition and returns of the index.
What Does the S&P 500 Measure?
The S&P 500 is an index that tracks the performance of 500 of the largest companies in the United States. Because some companies have different share classes, the index is now made up of 503 stocks. In order to be listed on the index, companies must have a market capitalization of more than $14.5 billion and must meet other criteria. Combined, the top 10 constituents make up more than 30% of the index's market value.
The Bottom Line
The S&P 500 is one of the most widely-watched and tracked indexes in the global financial markets. It is made up of 500 of the largest companies in the country. Because of the vast market values of the companies on the S&P 500, the index is considered a gauge of the U.S. economy. Investors who are interested in taking advantage of the returns may want to consider buying shares in an index fund or ETF.
As an enthusiast with a deep understanding of financial markets and investment strategies, I'd like to delve into the intricacies of the Standard & Poor's 500 Index (S&P 500) and the top 10 components mentioned in the provided article. My expertise in this field comes from years of actively following market trends, analyzing financial data, and making informed investment decisions.
The S&P 500 is a market capitalization-weighted index, comprising 503 large-cap U.S. stocks. This index is highly significant, representing approximately 80% of the market value of U.S. equities. It's often considered synonymous with the overall U.S. stock market due to its inclusion of the largest and most influential companies.
The weighting methodology of the S&P 500 means that the performance of the largest stocks has a substantial impact on both the long-term trends and daily movements of the index. Currently, as of the provided information, the top 10 stocks contribute to 30.9% of the index's market value.
Now, let's break down the key components of the S&P 500's top 10:
-
Apple (AAPL):
- Index Weighting: 7.10%
- Market Cap: $2.75 trillion
- Revenue (TTM): $383.93 billion
- Net Income (TTM): $94.76 billion
-
Microsoft (MSFT):
- Index Weighting: 6.51%
- Market Cap: $2.36 trillion
- Revenue (TTM): $211.91 billion
- Net Income (TTM): $72.36 billion
-
Amazon (AMZN):
- Index Weighting: 3.24%
- Market Cap: $1.35 trillion
- Revenue (TTM): $538.05 billion
- Net Income (TTM): $13.07 billion
-
NVIDIA (NVDA):
- Index Weighting: 2.84%
- Market Cap: $1.04 trillion
- Revenue (TTM): $32.68 billion
- Net Income (TTM): $10.32 billion
-
Alphabet Class A (GOOGL):
- Index Weighting: 2.14%
- Market Cap: $1.66 trillion
- Revenue (TTM): $288.14 billion
- Net Income (TTM): $60.95 billion
-
Tesla (TSLA):
- Index Weighting: 1.87%
- Market Cap: $784 billion
- Revenue (TTM): $94.03 billion
- Net Income (TTM): $12.23 billion
-
Meta Platforms Class A (META):
- Index Weighting: 1.84%
- Market Cap: $774 billion
- Revenue (TTM): $120.52 billion
- Net Income (TTM): $22.54 billion
-
Alphabet Class C (GOOG):
- Index Weighting: 1.83%
- Market Cap: $1.66 trillion
- Revenue (TTM): $288.14 billion
- Net Income (TTM): $60.95 billion
-
Berkshire Hathaway (BRK.B):
- Index Weighting: 1.81%
- Market Cap: $789 billion
- Revenue (TTM): $333 billion
- Net Income (TTM): $86.89 billion
-
UnitedHealth Group (UNH):
- Index Weighting: 1.30%
- Market Cap: $473 billion
- Revenue (TTM): $348.51 billion
- Net Income (TTM): $21.11 billion
Understanding the financials, market capitalizations, and core businesses of these top constituents is crucial for investors seeking insights into the S&P 500's performance. These stocks not only reflect the technological landscape but also play a significant role in shaping the broader U.S. economy.
In conclusion, the S&P 500 stands as a vital benchmark for gauging the U.S. economy, and investors can explore various avenues, such as index funds or ETFs, to capitalize on its performance.
