However, the index’s performance was highly concentrated. The top 50 performers posted returns ranging from 2,879.4% for the best (Sandisk “SNDK,” a digital memory manufacturer) to 83.8% for the 50th (Johnson Controls, “JCI,” a manufacturer of building products, including HVAC systems). The average return of these 50 top performers over the past 12 months was 293.8%.
A closer look at this performance shows that certain industries stand out. The first is the Semiconductor & Semiconductor Equipment industry, which includes 12 stocks, or 24% of the index’s top 50 performers, ranging from Micron (“MU,” 513.3%) to Microchip Technology (“MCHP,” 90.0%). Below are these companies, noting that many of them have substantial market capitalizations and therefore contributed significantly to the S&P 500’s performance (in this index, a stock’s weight is based on its market value or capitalization—the larger the company, the greater its weight in the index):
| Company | 12-Month Return | Market Cap (US$B) |
|---|---|---|
| Micron Technology « MU » | 513,3 % | 481,0 |
| Teradyne « TER » | 402,6 % | 57,9 |
| Lam Research « LRCX » | 296,1 % | 333,8 |
| Intel « INTC » | 230,2 % | 327,3 |
| Applied Materials « AMAT » | 173,0 % | 314,1 |
| Advanced Micro Devices « AMD » | 164,3 % | 402,4 |
| KLA « KLAC » | 163,9 % | 231,8 |
| Monolithic Power Systems « MPWR » | 157,4 % | 67,4 |
| Broadcom « AVGO » | 108,7 % | 1 798,0 |
| ON Semiconductor « ON » | 102,5 % | 28,0 |
| Analog Devices « ADI » | 95,4 % | 170,9 |
| Microchip Technology « MCHP » | 90,0 % | 39,8 |
The second most prominent industry among the winners is Electronic Equipment, Instruments & Components, with five major gainers, led by Coherent (“COHR,” 457.8%) and, in fifth place, Amphenol (“APH,” 122.1%).
On closer inspection, many of the biggest winners appear to have benefited from the massive investments in AI over the past year. I estimate this to be the case for 32 of the 50 top performers over the past 12 months, or 64% of the total. Performance was particularly strong in sectors directly tied to artificial intelligence, especially among chip and semiconductor suppliers. Other sectors also benefited from AI-driven demand, including construction and engineering, electrical equipment, machinery, and electronic equipment. In the latter cases, as with a heavy equipment company such as Caterpillar (“CAT,” up 169.8% over 12 months), demand related to the construction of data centers supporting AI growth explains the gains.
The Laggards
If we reverse the exercise and analyze the 50 worst performers in the S&P 500, we find that their average return was -38.0%.
Among these underperformers, the Software industry has the largest number of laggards, with eight stocks among the index’s biggest decliners. They are as follows:
| Company | 12-Month Return | Market Cap (US$B) |
|---|---|---|
| Workday « WDAY » | -47,1 % | 25,2 |
| Fair Isaac « FICO » | -47,0 % | 23,7 |
| Tyler Technologies « TYL » | -43,6 % | 13,6 |
| ServiceNow « NOW » | -43,3 % | 93,2 |
| Intuit « INTU » | -37,1 % | 102,2 |
| Roper Technologies « ROP « | -36,4 % | 36,7 |
| Salesforce « CRM » | -32,2 % | 159,5 |
| Adobe « ADBE » | -31,9 % | 97,1 |
The sharp decline in many large software companies mirrors the strong rise in companies benefiting from AI investment. Indeed, AI is expected to significantly disrupt the software industry in the coming years.
Other industries that struggled include Food Products, with five stocks among the 50 worst performers, and Insurance (also five stocks).
In summary, based on the data, I believe it is reasonable to conclude that the S&P 500’s stock market performance over the past 12 months has been largely driven—for better and for worse—by artificial intelligence.
Philippe Le Blanc, CFA, MBA
Chief Investment Officer at COTE 100
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