Tech's Half of the S&P 500 Cuts Its Economic Link, DataTrek's Colas Says

Technology and its biggest players now make up about 50% of the S&P 500, according to DataTrek co-founder Nick Colas, and he contends the index has never been a less reliable stand-in for the economy.

On Thursday, appearing on CNBC's Closing Bell Overtime, Colas addressed the market just as the 10-year Treasury yield dipped under 5%. That move is seen by some as a welcome reprieve, while others read it as evidence of a slowdown.

Why Have Bond Yields Stopped Following Oil? DataTrek's Colas Explains

In Colas's telling, oil prices and bond yields tracked each other for roughly 10 years. That relationship snapped in mid-September, he said, when crude declined even as yields pushed higher.

Instead, Colas attributes the action to artificial intelligence. Expectations of a pullback in AI funding, he says, are lowering real rates — yields once inflation is stripped out.

In the meantime, the prospect of an AI spending slowdown is also being weighed by investors.

On another front, Colas said the K-shaped economy remains intact, with affluent households continuing to prosper while the rest fall behind. Withdrawn IPOs, he said, could trim the population of wealthy people at the upper end of the K.

Could Tech's Hold on the S&P 500 Prove Lasting?

Colas attributes the change to Moore's law, the principle that microchip capability advances consistently while costs remain level.

By Colas's tally, technology's slice of the index currently exceeds oil's approximate 28% from 1980 and the tech weighting of 30% to 32% seen in 2000.

As for whether the market might broaden, Colas pointed to a single condition.

“until some other industry can double in power every two years for every dollar.”

Colas delivered that line during his appearance on CNBC.

Apollo chief economist Torsten Slok, by comparison, has said the tech bubble of the 1990s was less extreme than the current AI bubble. He laid out that view in a chart book published in September 2025.

What Does DataTrek Tell Clients About Hedging Concentration?

For clients who are nervous, Colas said, DataTrek recommends the equal-weight S&P 500. Under that method, each company carries an identical index weighting.

The Invesco S&P 500 Equal Weight ETF (RSP), he noted, has roughly 16% of its holdings in technology.

Homebuilders are another Colas favorite, a segment he says has underperformed since 2025. The group, he added, would also get a lift from mortgage relief.

Should Colas prove correct, the benchmark that most investors follow will continue to mirror the economics of chips more than the wider economy. That divergence lies at the heart of the AI bubble debate, with one side describing it as structural and the other as overheated.