The S&P 500 is shrugging off Nvidia's selloff. Here's what's keeping the rest of the market afloat.

By Isabel Wang

Is Wall Street finally outgrowing Nvidia?

If Nvidia's problems have done anything good for the stock market, it's that investors have been forced to look up from the poster child of the artificial-intelligence trade and remember the other stocks on the board.

That's why the S&P 500 SPX has managed to hold up, gaining 3.5% this week to date, even as Nvidia's shares (NVDA) have plunged nearly 12% after an investigation was launched into Jensen Huang. He resigned as CEO on Thursday following reports of his extramarital affairs.

At the sector level, the S&P 500's industrials XX:SP500.20, energy XX:SP500.10 and consumer discretionary XX:SP500.25 have been among the week's strongest performers in the large-cap benchmark index, according to FactSet data.

Notably, Nvidia's steep decline hasn't been enough to drag the broader tech sector lower. Instead, it has given other chipmakers and hyperscalers room to breathe, with the S&P 500's information-technology sector XX:SP500.45 still up 3.7% so far this week, according to FactSet data.

"Index investors have more exposure to this leadership drama than many realize," said Mark Malek, chief investment officer at Siebert Financial. "When a single company represents more than 6% of the S&P 500, its succession risk becomes a portfolio risk for millions of investors who never deliberately bought the stock."

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Yet with a current market capitalization of $3.9 trillion, Nvidia was on track for it lowest weighting in the S&P 500 since May 2025, according to FactSet data. In other words, despite remaining the world's third-largest company by market value, Nvidia could have a diminishing influence on the S&P 500 and investor portfolios, if the selloff continues.

This comes as Wall Street has spent more than three years worried about leaning too heavily on one stock. Nvidia has been that elephant in the room - so big that nothing else in the stock market could move without bumping into it. Now, with the broader stock market climbing, despite the shock surrounding the leader of the AI trade, investors appear to be increasing their bets beyond a single story.

That's why a stock like Advanced Micro Devices (AMD), one of Nvidia's biggest rivals, has popped over 29% this week. The PHLX Semiconductor Index SOX, which tracks major chip makers, is also up over 11% over the same period, according to FactSet data.

"As for the broader AI trade, this is an Nvidia problem before it is an AI problem," Malek said. "The biggest buyers are funding this buildout out of their own cash flow, and they need the chips no matter whose name is on the door."

James McCann, senior economist of investment strategy at Edward Jones, said investors should avoid "overconcentration risks" among technology companies, and instead look to hold "a well-diversified exposure" across large and midcap U.S. stocks, in emailed commentary on Thursday.

U.S. stocks were giving back their earlier losses to trade higher in midday action. The Nasdaq Composite COMP was flat, while the S&P 500 was 0.2% higher and the Dow Jones Industrial Average DJIA was up 0.4%, according to FactSet data.

-Isabel Wang

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