Nasdaq vs S&P 500: Tech Stock Supremacy Since Dotcom Low
This chart shows the performance of the Nasdaq vs S&P 500 from the dotcom bubble. Since the dotcom bottom in October 2002, investing in the Nasdaq 100 (NDQ, TradingView) would have beaten the S&P 500 (SPX) by almost 250%. But even with that massive gain, it took about 18 years for the Nasdaq to get back to its dotcom peak level (compared to the S&P 500).
The Nasdaq 100 is more focused on tech stocks and includes fewer companies than the broader S&P 500, which tracks the 500 biggest companies in the US stock market. The chart suggests that tech stocks have generally dominated the market since 2002. But during the dotcom collapse, tech stocks got completely battered compared to other industries.
Today’s Nasdaq is not the same as it was during dotcom
Back in the dotcom days, the Nasdaq was much more speculative. Tech companies were less profitable, and many weren’t even profitable at all. But today, about 42% of the Nasdaq 100 is made up of the Magnificent Seven: Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta. These are highly profitable companies. They’re also part of the S&P 500, but they currently take up a smaller percentage of that index—about 31%.
Magnificent Seven weights: Nasdaq vs S&P 500
| Magnificent Seven Stocks | % Share of the Nasdaq 100 | % Share of the S&P 500 |
|---|---|---|
| Apple | 9.16% | 7.14% |
| Microsoft | 8.09% | 6.56% |
| Nvidia | 7.66% | 6.16% |
| Alphabet (Class A & C) | 4.92% | 3.62% |
| Amazon | 4.85% | 3.62% |
| Meta | 4.74% | 2.56% |
| Tesla | 2.70% | 1.49% |
| Total | 42.12% | 31.15% |
Higher beta means higher risk
Even though tech stocks are more profitable now, they’re still considered “higher beta” than other stocks. That means they can rise faster in bull markets—and fall harder in bear markets. Tech companies tend to reinvest in future technologies and spend less on paying dividends. So, investors focus more on potential growth than on steady returns and cash flow. And that’s usually when investors are willing to take bigger risks.
So if you see this chart start to keel over, it’s probably because investors are becoming more risk-averse. But until that trend officially changes, tech stocks are still in charge.
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