The epic rally in shares of tech behemoths is far outpacing their profits, and it could mean the S&P 500 is looking more vulnerable, according to\u00a0Apollo Global Management<\/a>\u00a0chief economist Torsten Sl\u00f8k. <\/p>\n In a note on Sunday<\/a>, he pointed out that the top 10 companies in the S&P 500 account for 35% of the index\u2019s market value but only 23% of its earnings.<\/p>\n \u201cThis divergence has never been bigger, suggesting that the market is record bullish on future earnings for the top 10 companies in the index,\u201d Sl\u00f8k wrote. \u201cIn other words, the problem for the S&P 500 today is not only the high concentration but also the record-high bullishness on future earnings from a small group of companies.\u201d<\/p>\n Apollo Global Management<\/p>\n<\/div>\n Because the S&P 500 is weighted by market cap, soaring share prices of Big Tech companies rushing into the AI boom has meant that recent gains are concentrated<\/a> into just a handful of stocks, obscuring the relative mediocrity for rest of the index.<\/p>\n Before Nvidia began its selloff<\/a> earlier this month, the AI chip leader accounted for more than a third of the S&P 500\u2019s rally<\/a> this year. <\/p>\n \u201cSuch a high concentration implies that if Nvidia<\/a> continues to rise, then things are fine,\u201d Sl\u00f8k warned on June 12<\/a>. \u201cBut if it starts to decline, then the S&P 500 will be hit hard.\u201d<\/p>\n As market leadership becomes more concentrated, so are investors\u2019 portfolios, especially as putting money in funds that track indexes becomes increasingly popular.<\/p>\n Bank of America<\/a> analysts said in a recent note that the average large-cap fund\u00a0has 33% of\u00a0its portfolio\u00a0in its top five holdings, up from just 26% in December 2022. <\/p>\n Similarly,\u00a0the share of funds the have more than 40% of\u00a0their portfolio\u00a0in their top five holdings has jumped to 25% from less 5% in December 2022. <\/p>\n Meanwhile, Wall Street analysts have been bullish on the S&P 500 and are scrambling to raise their year-end targets<\/a>. Even one of the biggest bears has surrendered<\/a> and is now one of the most bullish analysts.<\/p>\n And Fundstrat Global Advisors cofounder Tom Lee\u00a0recently said the S&P 500 could hit 15,000<\/a> by the end of the decade. He isn\u2019t the only Wall Street bull making bold predictions. <\/p>\n Ed Yardeni has been pounding the table about another \u201cRoaring Twenties\u201d super-cycle and has said the\u00a0S&P 500 would jump to 6,000<\/a>\u00a0by next year. By the end of the decade, he said the stock index\u00a0could reach 8,000<\/a>.<\/p>\n<\/div>\n![\"\"](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/06\/Screenshot-2024-06-30-at-10.54.04AM-e1719770192833.png?w=1440&q=75\"\/)
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