Key takeaways

  • US stock market concentration has steadily increased over the past five years, with the first-quarter rotation in 2026 doing little to disrupt that trend.
  • The technology sector accounted for more than 70% of the market’s losses in the first quarter and more than half of its gains so far in April.
  • Technology is leading returns in April, reversing the sector’s first-quarter skid.

After a rocky start to the year for tech stocks, analysts had been looking for the highly concentrated stock market to broaden. But as the same tech companies that weighed on indexes in the first three months of 2026 have powered April’s rebound, extreme market concentration hasn’t let up.

Just five stocks—Nvidia NVDA, Apple AAPL, Microsoft MSFT, Amazon AMZN, and Alphabet GOOGL—account for roughly 23% of the Morningstar US Market Index, giving them an outsize influence on both the market’s first‑quarter selloff and its April recovery. That level of concentration is well above historical norms; the top five stocks accounted for about 16% of the index five years ago and just 9% a decade ago.

Through the first three months of the year, US market performance was split sharply along sector lines. Financial services, communication services, consumer cyclical, and technology each fell more than 8%, while the Morningstar US Energy Sector Capped Index surged 38% amid soaring oil prices tied to the Iran war.

The net result was the US Market Index slipping 4.2% in the quarter. Roughly 3 percentage points of that decline—about 70%—came from technology. With tech accounting for 32.6% of the US Market Index, compared with just 3.4% for energy, even a historic run in energy stocks was nowhere near enough to offset losses in the market’s largest sector.

April has marked a sharp reversal. Technology stocks climbed 15%, while consumer cyclical stocks rose 12%, pushing the US market into positive territory for 2026. By contrast, energy stocks fell 10% in April as oil prices pulled back, though the sector remains up 24% for the year. In April alone, technology stocks added 4.9 of the market’s 9.2-percentage‑point gain, more than half the rebound.

Despite a brief rotation, market concentration remains elevated

So far in 2026, the technology sector has been responsible for 1.6 percentage points of the US market’s 4.7-point gain (34%). Major semiconductor players Nvidia and Broadcom AVGO, two of the 10 largest holdings in the index, together contributed a full point (roughly 21% of the advance).

The latest tech dominance continues a greater trend. Over the past three years, technology accounted for more than half of the market’s gains in positive quarters—or more than half of its losses in negative ones—roughly half the time, highlighting the sector’s consistent outsize influence on overall returns.

Even after a first-quarter rotation away from technology stocks, market concentration has changed little. The five largest stocks now account for 23% of the US Market Index, while the top 10 make up 33%. That’s slightly below levels at the end of 2025, when the top five represented 25% of the index and the top 10 stood at a peak of 36%, following several years of steadily rising concentration.

The longer‑term trend underscores how elevated today’s levels remain. At the start of 2023, the top five stocks accounted for 17% of the index and the top 10 for 24%. Five years ago, those figures were slightly lower, at 16% and 22%, respectively.

2026 leading market contributors

Tech-related industries have led the market in 2026, with semiconductor equipment and materials at the top, up 47.6%. Semiconductor manufacturers ASML Holding ASML (up 35.3%), Applied Materials AMAT (up 52.6%), and Lam Research LRCX (up 53.9%) drove the gains.

Computer hardware stocks are close behind, rising 45.3% this year. Top holding SanDisk SNDK, a memory chip supplier, has surged 284.6%, while hard disk drive supplier Western Digital WDC is up 117.2%.

2026 market laggards

Software application stocks have been the worst performers, tumbling 22.7% on fears that AI will upend the space. Heavyweight enterprise resource planning software company SAP SAP and leading customer relationship management platform Salesforce CRM, the two largest holdings in the index, are each down close to 30%.

Advertising is the second-worst performer, down 20.9%. Advertising technology firm AppLovin APP, which accounts for 53.1% of the index, has fallen 27.1% in 2026. The gambling industry ranks third, down 20.7%.