Startups are eating the S&P 500
Marc Andreessen will be right again. Shocker. In a recent episode of Jack Altman's Uncapped, he noted:"I've been saying for years now is the S&P 500 is not it's no longer the S&P 500 it's like the S&P 492 and the S&P 8. So there's like 492 companies in the S&P that have no desire at all right, just like watching their behavior to like really charge hard at the future like they don't want to do it, they won't do it, they're not doing it, and then eight are betting everything." Said differently, startups are eating the S&P 500.
Once you strip out the eight mega-platforms, you are left with hundreds of mature firms that built their moats in a pre-AI, pre-blockchain, pre-synthetic-biology world. The data backs that view. As of June 2025, the entire index was valued at approximately 53.7 trillion USD. Six traditional sectors account for roughly 43 percent of that value, or approximately $23.1 trillion, and each of these sectors is now in the crosshairs of rapidly advancing technology companies.
Where the pressure is greatestFinancials sit on approximately $7.7 trillion of market value. Legacy core banking systems and twelve-month change cycles cannot keep pace with cloud-native payment rails and real-time settlement. Healthcare accounts for approximately $5.2 trillion. Generative models can draft clinical notes and explore billions of virtual drug compounds in hours, compressing the timelines incumbents rely on. Industrials and transportation contribute approximately $4.7 trillion. Computer vision, low-cost sensors, and robotics now enable autonomous trucks, drones, and factory lines to operate with far less labor.
Consumer staples account for approximately $3.2 trillion. Synthetic biology and direct-to-consumer brands are eating the margin that once belonged to mass grocery channels.Utilities have approximately $1.3 trillion in market capitalization tied to centralized generation and volumetric billing. Long-duration storage and smart panels enable homes to operate independently of the grid. With nuclear fission resuming and fusion on the horizon, a significant disruption is looming, akin to a tidal wave. Real estate rounds out the list with approximately $1.2 trillion. Remote work and data-rich proptech platforms are undermining the brokerage and leasing models that have dominated the sector. And now real estate categories like branded travel, data center, and coworking will generate new alpha. Why this mattersIf even a quarter of the trillions of dollars locked in these six sectors migrate to the insurgents, a massive amount of equity value will change hands within a decade. Boards inside the index cannot ignore cost curves that fall every quarter and product cycles that turn in weeks. Investors cannot ignore private companies that are already valued in the tens of billions before an initial public offering. The center of gravity in each sector is shifting outward, and this shift is occurring rapidly.
Marc will be correct. Startups are eating the S&P 500.
