SpaceX in S&P 500 would push AI stocks to 51%, strategist says

Jim Bianco, an investing strategist at Bianco Research, calculated that if SpaceX were currently included in the S&P 500, AI-related stocks would account for 51% of the index's total weight. The analysis highlights the potential for extreme market concentration should the aerospace company eventually meet the index's eligibility criteria.

SpaceX is not yet eligible for inclusion in the S&P 500. S&P rules require a company to be publicly traded for at least 12 months before it can be added to the index. Based on this requirement, SpaceX will not be eligible for consideration until June 2027 at the earliest. Despite this timeline, strategists are already modeling the impact of its potential entry on sector weights.

Bianco, who has nearly 790,000 followers on X, outlined a further scenario in a recent post. He noted that if Anthropic and OpenAI went public before the end of the year, AI stocks would comprise 55% of the S&P 500. Bianco described this outcome as unlikely, particularly regarding OpenAI. He compared the current concentration to historical financial events, stating that the last time a single theme represented more than 50% of the S&P 500 was during the railroad era in the 19th century.

This comparison draws attention to the railroad bust of the late 1800s. BofA strategists reported this week that historical asset bubbles typically peaked at concentration levels around 40% of US market capitalization, with the railroad boom being a notable exception. Currently, 10 AI stocks, including Nvidia, make up 42% of the index. During the railroad boom, that figure reached 63%.

The railroad bust of 1873 was a significant financial collapse driven by speculation in railroad construction, which ultimately led to the Panic of 1873. According to PBS, 89 of the country's 364 railroads went bankrupt during the bust. A total of 18,000 businesses failed within two years of the collapse. By 1876, unemployment had risen to 14%.

The recent move by SpaceX in the wireless industry through its Starlink service has generated significant attention, though it does not alter the company's immediate eligibility status for major indices. The discussion among financial analysts reflects a broader concern regarding the growing dominance of AI-related companies in market capitalization.