The stock market is increasingly dominated by a few huge and extremely profitable "superstar" companies.

Why it matters: The historic rise in stock market concentration reflects Big Tech's dominance and mirrors a worrying rise in wealth inequality among regular people — but it's not clear if it's a real problem for investors.

By the numbers: The most profitable third of publicly listed U.S. stocks now account for roughly two-thirds of total market capitalization — the highest share on record, going back to 1963.

• That's 63 years! The data was highlighted by Ernie Tedeschi, chief economist at Stripe, who wrote about it last week.

How it works: The AI boom made the biggest companies even more profitable last year, he says.

• And some largeish businesses that grew more profitable ascended into the top third.
• The big guys aren't simply the Magnificent 7 companies, but include Netflix, Home Depot and JPMorgan Chase.

"We're just seeing explosive growth in established companies," Tedeschi tells Axios.

The big picture: The U.S. stock market is incredibly top heavy. Just a few firms make up nearly 40% of the total market cap of the S&P 500.

• The current level of concentration in the market is now higher than it was in 1932, per data cited recently by Morningstar.
• Back then, nearly 13% of the entire value of the U.S. stock market was concentrated in one company, AT&T, Wall Street Journal columnist Jason Zweig noted earlier this year.
• Another time of high concentration was during the dot-com boom.
• That concentration could intensify if mega-AI startups Anthropic and OpenAI go public this year — not to mention SpaceX.

Follow the money: High concentration means investor returns are increasingly dependent on just a few companies.

• It's kind of counterintuitive: You would think that by investing in, say, an index fund that tracks the S&P 500, you're diversifying your investments. Instead, you're actually just betting on a handful of companies.

"If the biggest trees fall, everyone will feel the forest shake" is how the New York Times' Jeff Sommer put it recently.

• For those who've been told diversification matters, it's uncomfortable.
• Investors are talking about this "a lot," Dan Lefkovitz, a strategist with Morningstar, tells Axios.

The intrigue: The risks of concentration are a great talking point for those who think they can do a better job actively managing your money, WSJ's Zweig points out.

• But concentration is not necessarily a bad development for investors. Investing in the stock market in 1932, when concentration was super high, was a great deal. Stocks were cheap.

"The U.S. stock market has not become riskier as it has become more concentrated," write Mark Kritzman, chief executive of Windham Capital Management, and David Turkington, head of State Street Associates, whose research appeared last year.

• They put historical data through a few tests to see if investors benefited by avoiding putting money into concentrated markets. They didn't.
• They find that big companies are inherently less risky than small ones — they're more diversified (that word again) — offering more products and serving bigger markets, with more flexibility to manage troubled times and better access to capital.

Yes, but: There are of course all kinds of other risks to having just a few big companies suck up all the profits — there is a thing called antitrust law for one.

The bottom line: A few big companies running the whole economy is scary for regular people, but for investors maybe not.

Oil prices at four-year highs (and maybe climbing further) might nudge record U.S. production even higher — but don't expect a new boom.

Why it matters: Companies in onshore shale — the most nimble part of the industry — need lots of convincing to invest far beyond current plans, analysts say.

The big picture: Several interlocking reasons will limit how much even very high prices will affect U.S. production.

• One is that nobody knows how long the war that's now throttling Middle East supplies will last.
• Companies are watching a forward price curve that, for now, sees decline months down the road.

Flashback: Another reason is scar tissue. Producers and investors remember the wreckage of the debt-fueled, growth-above-all 2010s era.

• "Today's public [exploration and production] companies are no longer cowboys willing to blast off billions in capex because of a 'hunch,'" veteran analyst Dan Pickering said in a blog post.
• Capital discipline, investor payouts and bolstering balance sheets remain today's priorities as companies are in line for a windfall.

Zoom out: Shale producers had budgeted for West Texas Intermediate prices in the range of $55 to $60 a barrel, said Rystad Energy analyst Matthew Bernstein in a note.

• He and others say major plan revisions are unlikely unless it's clear that high prices will remain for months.
• Remember that until this war, the dominant market narrative was one of oversupply.

What to watch: A long and even more damaging crisis could bring a different calculus.

• Pickering writes that a "clear geopolitical signal that higher prices will be structural" would be among the forces that bring shale companies "off the fence."

Yes, but: Wild cards abound. Prices that reach and remain in the stratosphere could trigger "demand destruction."

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Prices for copper — a metal used in basically everything that gets manufactured, from vehicles to homes to electronics — slumped 8.5% last week.

Why it matters: Copper's price is typically viewed as a gauge on economic growth.

Zoom in: The leg down, off record highs earlier this year, is a signal that investors see the economy slowing.

Between the lines: Market participants like to talk about how "Dr. Copper" diagnoses the economy.

The big picture: Aluminum prices also fell last week, as worries grew over a war-driven economic shock.

• There's also worry over supply disruptions.