Why Broadcom Could Be the Next Mega-Cap Monster Stock

“Magnificent 7” tech giants NVIDIA (NVDA), Microsoft (MSFT), and Apple (AAPL) dominate passive investing flows. But a quiet shift is underway: Broadcom (AVGO) is carving out a larger share of the pie.

In the Sept. 5 Market on Close livestream, John Rowland, CMT, explained how Broadcom is benefiting from the concentration trend that defines modern equity markets — and what it means for traders and investors.

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Passive Investing and Concentration

Every dollar that goes into large-cap growth funds or S&P 500 Index ($SPX) funds doesn’t get spread evenly. Instead, it gets heavily concentrated.

Nearly 20% of the S&P 500’s weighting sits in just three stocks: NVIDIA, Microsoft, and Apple.

But Broadcom, which was a much smaller component just a year ago, now represents over 2.5% of the index — and climbing.

As John put it:

“I don’t care what Broadcom’s results are, because passive investing tells me that every month, money is going to flow into Broadcom.”

What This Means for Investors

• Rising Allocation = Rising Flows: As AVGO gets a bigger slice of passive funds, it naturally attracts more capital.
• Alpha Opportunities: If you’re just buying the S&P, you’re really buying the top 5–6 stocks. To find alpha, look at names like that are climbing in the allocation ranks. That includes AVGO, and also Oracle (ORCL), which just exploded in size this week - and is also featured on John’s custom “Mag 7 Plus” watchlist.
• Rotation Signals: Tesla (TSLA) has fallen out of favor, while Broadcom’s steady rise shows how passive flows can shift leadership within the Mag 7.

Tools to Track This Trend

• Follow John’s custom Magnificent 7 Watchlist on Barchart, featuring his personal additions like AVGO, ORCL, SPY, and QQQ.
• Use the Constituents tab on the S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ) to track top weightings.
• Screen the Top 100 Stocks list with Barchart’s Stock Screener to track which stocks are climbing the ranks.

Bottom Line

At this point, Broadcom’s rise isn’t fueled by results or even hype; it’s driven at least in part by passive investing flows. For traders, watching how these flows shift among the Mag 7 and beyond can be just as important as fundamentals.

Watch the clip here:

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