The breadth of the U.S. equity market has never been this concentrated, and the dominance of a select group of stocks continues to intensify. The Nasdaq 100 index posted a record closing high on Tuesday, its first since June, yet half of that gain was driven by just four chipmakers: Micron Technology, SanDisk, AMD, and Nvidia.

Over the past week, the Nasdaq 100 has climbed more than 6%, but during that same period, 32 of its components actually declined. Half of the gains across those five trading sessions were entirely supported by just five stocks: Micron Technology, AMD, Nvidia, Intel, and Meta.

Since ChatGPT debuted in November 2022, igniting the AI frenzy, the standard version of the Nasdaq 100—which weights components by market capitalization—has significantly outperformed its equal-weight counterpart. Over these four years, the concentration tied to the AI boom has steadily risen. Companies have been able to build platforms that hold a "dominant" position and retain the resulting profits to an unprecedented degree.

Overall, this has driven a substantial upward revision of earnings expectations for the Nasdaq 100, but those projections effectively rely on a handful of leaders. The essence of capitalism dictates that a few big winners will always emerge. Yet a prolonged period where a market-cap-weighted index outperforms as it has now is exceptionally rare. The closest parallel to the current cycle is the late 1990s. The increasing concentration of market gains during the AI boom bears a striking resemblance to the rally that followed Yahoo's IPO and the subsequent internet bubble. That is hardly a favorable precedent and should temper the excitement surrounding the new record highs.