DataTrek co-founder Nick Colas says tech and big tech now account for about 50% of the S&P 500. He argues that makes the index a weaker proxy for the economy than it has ever been.
Colas spoke on CNBC’s Closing Bell Overtime on Thursday, as the 10-year Treasury yield slipped below 5%. The drop reads as relief to some and as a sign of slowing growth to others.
Why Are Yields Ignoring Oil, According to Nick Colas?
Colas said oil and bond yields moved together for roughly 10 years. However, he said that link broke in mid-September, as oil fell and yields kept climbing.
Instead, he ties the moves to AI. He says expectations of less AI funding are easing real rates, meaning yields adjusted for inflation.
Meanwhile, investors are also weighing a possible AI spending slowdown.
Separately, he said the K-shaped economy, where higher earners thrive while others lag, still holds. He said withdrawn initial public offerings (IPOs) could thin the ranks of the wealthy at the top of the K.
Is Tech’s Grip on the Index Permanent?
Colas credited Moore’s law, the observation that chip capability rises steadily while costs hold, for the shift.
By his count, tech’s share now tops both oil’s roughly 28% in 1980 and tech’s 30% to 32% in 2000.
On whether the market will broaden, Colas named one condition.
“until some other industry can double in power every two years for every dollar.”
Nick Colas, speaking on CNBC
In contrast, Apollo chief economist Torsten Slok has argued that the 1990s tech bubble was smaller than today’s AI bubble. He made that case in a September 2025 chart book.
How Is DataTrek Telling Clients to Hedge Concentration?
Colas said DataTrek advises worried clients to look at the equal-weight S&P 500. That approach gives every company the same share of the index.
The Invesco S&P 500 Equal Weight ETF (RSP) holds about 16% tech, he noted.
He also likes homebuilders, which he said have lagged since 2025. Mortgage relief would help the group, he added.
If Colas is right, the index most investors track will keep reflecting chip economics more than the broader economy. That split sits at the center of the AI bubble debate, where one camp sees structure and another sees excess.
