The stock market looks wild under the surface

The S&P 500 appears relatively calm on the surface this year, but dig a little deeper and you'll find some wild swings.

Why it matters: Investors have retreated from the Big Tech names that carried the market in recent years, putting downward pressure on stocks.

By the numbers: The S&P 500 has fallen just 3% for the year, but that masks some big-time volatility.

• 57 stocks are up by at least 20%, and 47 stocks are down by at least 20%, according to an analysis conducted Friday afternoon by Bespoke Investment Group.
• That's unusual, says Paul Hickey, the investment advisory firm's cofounder.

The big picture: AI and the war are pushing stocks around in new ways.

• Investors are pulling back from software in the wake of the SaaS-pocalypse and rotating toward defense and energy stocks.

Winners. Energy and defense industry stocks like Valero (+43%), Occidental Petroleum (+40%) and Lockheed Martin (+34%).

Losers. Workday, which makes HR software imperiled by the SaaS-pocalypse, has declined 39% this year. Oracle, an AI darling stock, is down 20%, and Salesforce, the SaaS king, off 27%.

Yes, but: Software might be out, but hardware is very much in: Companies benefiting from the RAM and memory chip shortage are slaying.

• SanDisk is up 168% for the year; Micron (+48%).

Between the lines: The biggest stocks that weigh most heavily on the market haven't seen such wild ups or downs — but things are meh.

• The Magnificent 7 was down about 8% for the year, as of Friday afternoon, when Bespoke pulled the numbers.

How it works: The S&P 500 is weighted by company size — bigger firms have outsize impact on the index.

• The top 10 stocks on the S&P 500 — that includes the Mag 7 —  make up about 40% of the index, as Apollo Global's chief economist Torsten Slok recently pointed out.
• "If they do nothing, the other 60% has to go up to move the needle," says Hickey from Bespoke.

Reality check: You could also argue that the relatively mild fall for the Mag 7 stocks is keeping the market from looking even worse.

The intrigue: If Anthropic, OpenAI and SpaceX are added to the S&P 500 this year, market concentration could approach 50%, Slok noted. That would mean the index "basically doesn't offer much diversification anymore."

What to watch: Some of this trend is actually starting to reverse, says Abby Yoder, U.S. equity strategist at JPMorgan Private Bank.

• Software started performing better in the first week of the war, she tells Axios. Tech is recovering a bit now that it's out of the spotlight.
• "AI is taking a backstep to geopolitics," she says.

The bottom line: "For years we basically heard about how the market was top heavy. Now those mega-cap stocks haven't performed as well," Bespoke's Hickey says. "So they act as a weight on the market."