Trillion-Dollar Stocks Lag Behind S&P 500: Megacaps Show Weakness

The shine of the largest stock market giants is fading. The S&P 500 closed on October 6, 2026 at 7,818.93 points at a record high and is up 14.3 percent since the start of the year – many members of the exclusive trillion-dollar club are lagging behind. Only a minority of heavyweights are outperforming the broader market: a sobering result for companies that were buoyed by AI euphoria in previous years.

Valuations at Record Highs – Performance Disappoints

US megacaps were valued at more than 32 times earnings in early 2026 – nearly twice as high as international heavyweights, according to MSCI. Microsoft cost 525.50 US dollars on October 7, 2026; measured against the earnings of the past twelve months of 17.95 US dollars per share, that corresponds to a price-to-earnings ratio of 29.5, based on earnings estimates of 26.8. Despite these ambitious multiples, megacaps were already lagging behind all other major stock segments at the start of the year.

The high valuations reflect massive investments in artificial intelligence. Many of the trillion-dollar companies are either AI stocks or big tech companies whose stock values have risen sharply in recent years. This development contributed significantly to the S&P 500's performance – but concentration in the index is growing.

Wall Street Bet on Microsoft – and Got It Wrong

At the start of the year, analysts held onto positive expectations. Microsoft was considered the top performer among trillion-dollar stocks on January 10, 2026: based on median price targets, analysts gave it the highest gains of the year, and on March 1, 2026, they expected the trend of "the big getting bigger" to continue. That hasn't panned out so far: in mid-July, the Microsoft stock was down 18.6 percent, while the S&P 500 gained 9.9 percent.

For Nvidia, a total of 59 out of 63 Wall Street analysts rated the stock "Strong Buy" or "Buy" on February 12, 2026. Most optimistic was Mark Lipacis of Evercore ISI with a price target of 352 US dollars – at the time around 90 percent upside potential. Similar high expectations existed for Meta (Rosenblatt: 1,144 US dollars, around 73 percent) and Microsoft (DBS Bank: 678 US dollars, around 69 percent). These prices are far from these targets in October 2026: Nvidia was recently trading at around 229 US dollars, Microsoft at 525 US dollars.

Concentration Risks in Focus

The dominance of megacaps harbors risks: the higher their weighting, the more sharply price declines of individual heavyweights impact the entire index. How violent swings in the AI space can be is shown by semiconductor equipment manufacturer KLA: the stock lost 35.32 percent in the third quarter of 2026 and was trading on October 1, 2026 around 36.6 percent below its annual high of 307.37 US dollars – over twelve months it was still up well over 80 percent. With a market value of around 254 billion dollars, KLA does not belong to the trillion-dollar club, however.

That the club is no longer purely American is demonstrated by SK Hynix: the South Korean memory manufacturer crossed the one trillion US dollar mark for the first time at the end of May 2026 and additionally went public on the Nasdaq in July. The club remains exclusive – but valuations are volatile.

Outlook for Investors

For investors in the DACH region, the weak performance of many megacaps means a reassessment of strategy. While analysts formulated high expectations for AI heavyweights at the beginning of 2026, reality has not lived up to these forecasts so far. Those who bet on the S&P 500 as a whole fared better than with targeted bets on individual trillion-dollar stocks. The high valuation multiples – particularly for US stocks – leave little room for disappointment.

This article is journalistic analysis and not investment advice.