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Nvidia<\/a> stock has continued its stunning rally this year, sending the AI chip leader\u2019s valuation past $3 trillion<\/a> and making it an even bigger presence in the S&P 500.<\/p>\n In fact, 34.5% of the S&P 500\u2019s market cap gains so far this year can be attributed to Nvidia alone, according to Apollo Chief Economist Torsten Sl\u00f8k.<\/p>\n Shares have soared 166% in the year to date and are up more than 200% from this time a year ago. That\u2019s as the artificial intelligence craze has gripped Wall Street, and Nvidia\u2019s quarterly earnings<\/a> show no sign that the rush to stock up on AI chips isn\u2019t slowing down.<\/p>\n But relying so much on one stock also represents a big risk, Sl\u00f8k warned. <\/p>\n \u201cSuch a high concentration implies that if NVIDIA continues to rise, then things are fine,\u201d he wrote in a note on Wednesday<\/a>. \u201cBut if it starts to decline, then the S&P 500 will be hit hard.\u201d<\/p>\n Because the S&P 500 is weighted by market cap, even relatively minor wobbles from behemoths like Nvidia, Apple<\/a>, and Microsoft<\/a> can move the needle on the broad stock market index.<\/p>\n And as retail investors increasingly load up on S&P 500 index funds, that means exposure to Nvidia\u2014for better or for worse\u2014is growing as well.<\/p>\n \u201cThe bottom line is that the extreme concentration of returns in the S&P 500 makes investors more vulnerable to single headlines impacting the one stock driving index returns,\u201d Sl\u00f8k added.<\/p>\n This isn\u2019t the first time he has sounded the alarm on the stock market\u2019s dependence on Big Tech.<\/p>\n When Nvidia\u2019s market cap topped $2 trillion for the first time ever earlier this year, Sl\u00f8k compared tech valuations to the bubble<\/a> seen during the\u00a0dot-com\u00a0era.<\/p>\n \u201cThe top 10 companies in the S&P 500 today are more overvalued than the top 10 companies were during the tech bubble in the mid-1990s,\u201d he wrote at the time<\/a>.<\/p>\n Others on Wall Street are also growing more skeptical about Nvidia\u2019s valuation<\/a> and its attractiveness as an investment after the stock\u2019s epic rally.<\/p>\n But Nvidia stock bulls remain. Beth Kindig, lead tech analyst at the I\/O Fund, sees more astronomical gains in the coming years, predicting its market cap will surge more than triple again to $10 trillion by 2030<\/a>.<\/p>\n Meanwhile, Nvidia CEO Jensen Huang continues to surprise Wall Street, most recently by laying out a\u00a0rapid cadence of new AI platforms<\/a>.<\/p>\n Earlier this month, he said Nvidia plans to upgrade its AI accelerators every year as he announced the Blackwell Ultra chip for 2025 and a next-generation platform in development called Rubin for 2026.<\/p>\n<\/div>\n\nSubscribe to the CFO Daily newsletter to keep up with the trends, issues, and executives shaping corporate finance. Sign up<\/a> for free.<\/div>\n