Microchip Stocks Now Outweigh by their Total Market Cap Software Stocks in the S&P 500 and Have the Largest Overall Weighting

Chip stocks slowly but surely outshone software stocks in the S&P 500 and rose to the largest overall weighting. At the time, the microchip industry’s weighting in the S&P 500 hit a new high of 11%, a sharp increase from just 2% in early 2014.

Meanwhile, the five largest sectors have a combined weighting of 27%, the highest in 44 years. However, we can be contemplating the culmination of this story, and relevant trends in the software industry could get worse before they get better, as many companies recently said the macroeconomic environment has caused customers to hold off on deals and become more cautious about spending. Software companies are also touting artificial intelligence, but haven’t seen that trend translate into much new demand or growth, which could broaden the rotation outside the sector. Across the tech sector, valuations may be the biggest concern.