The S&P 500's gains are almost entirely from just five companies

A hypertrophied tech sector is carrying the stock market once again.

The big picture: The S&P 500 is up 8.9% so far in 2023, or 9.7% including dividends. But the lion's share of that increase is due to the surging prices of a few of the largest companies.

State of play: The big five that are responsible for the vast majority of the stock market's 2023 gains are Apple (up 36% this year), Microsoft (37%), Alphabet (39%), Amazon (44%), and current stock market darling Nvidia, which has surged 159% on AI-related excitement.

• Without them, the overall market (including dividend payments) would be up just 1.5% this year, according to data provided by Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
• If you also remove the contributions from the two other largest tech companies — Meta (up 120% in 2023) and Tesla (66%) — the S&P 500 would be slightly underwater for the year, Silverblatt says.

Be smart: The S&P 500 — the most widely used gauge of the stock market — is a market-cap-weighted index.

• Market caps — calculated by multiplying shares outstanding by share price — can be thought of as a price tag, or total value, of public companies.
• In a market cap-weighted index, the companies with the biggest market caps have the biggest impact on how the overall index moves.

And this year, they're up big, thanks to a goldilocks-like backdrop of falling inflation, solid economic growth, and a good, old-fashioned high-tech hype hootenanny about an emerging technology.

• The flurry of excitement over "generative AI" has supercharged shares of Microsoft, Google parent Alphabet, and Nvidia, which have close ties to the technology.
• Meanwhile, Apple's and Amazon's respective romps were driven largely by remarkably solid earnings that defied earlier expectations for a consumer slowdown.
• These companies have also benefited from the typical tailwind that tech-centric, "growth" companies catch when the market smells a pending shift away from rate hikes.

The other side: Some see the dominance of the stock market by these few companies as a warning sign that the market as a whole isn't actually doing that well — and of how vulnerable it is to any weaknesses in these five.

• The top five companies' share of the S&P index is incredibly large, relative to history.

Yes, but: It's typical for a small number of companies to be outsized drivers of the stock market's gains.

• A few years ago the FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google — as Alphabet was then known) were the engine of the markets.
• In the late 1990s, the "Four Horsemen" — Microsoft, Cisco, Oracle and Intel — led the market's charge.
• In the late 1960s and early 1970s, it was the fast-growing "Nifty Fifty" that lifted the market.

The bottom line: If investors hope to recover quickly from last year's ugly 19% downdraft in the S&P, fast-growing tech companies will be doing most of the heavy lifting.