The 10 biggest U.S. companies now make up more than a third of the S&P 500. At the peak of the dot-com bubble, the top 10 didn't come close to that.
One of Wall Street's most famous bubble-spotters says that should worry you.
The warning comes from Jeremy Grantham. He co-founded the investment firm GMO and called the dot-com crash years ago.
GMO is a firm that manages money for big investors.
On the Odd Lots podcast, he laid out the math. The 10 biggest stocks now make up more than a third of the S&P 500.
That's well above the level they hit at the late-1990s peak. A small group of giant tech names is doing most of the lifting, led by AI star Nvidia.
Microsoft and a handful of others round out the top 10. Grantham thinks the prices have raced way ahead of the profits.
He compares the AI boom to the dot-com days and even the railroad mania of the 1800s. The new tech was real every time, but the stocks still crashed once the hype cooled.
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Grantham pointed to a few late-stage bubble signs. The first is narrowing breadth.
That means the index keeps climbing while most stocks inside it fall. A few winners hide a lot of losers.
The next sign is everyday traders piling into zero-day options. Those are bets on a stock that expire the same day.
He also sees stocks pricing in rate cuts. Meanwhile, the bond market still warns that inflation is sticky.
The last sign is the oldest one. Lots of smart people keep swearing that this time is different.
None of this tells you when to sell. Bubbles can run hot for years.
But Grantham's real point is about size. When 10 stocks carry the whole market, one stumble can drag everything down.
Most of that risk sits in a few names. If they wobble, even plain index funds feel it.
The bigger the crowd in one trade, the harder the exit. That's the danger hiding inside a record-high market.
It's the same setup that turned past booms into busts.
Grantham has nailed big calls before, including the dot-com crash. He has also been early, which burns anyone who copies him too soon.
He spelled out his case in a paper this year. It asked whether AI is an extreme bubble or a new golden era, and his answer leaned hard toward bubble.
He isn't putting a date on this one. But he put the odds that the AI bubble never bursts at "slim to none."
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