The Magnificent 8 Stocks: What They Are, Why Broadcom Joined, and How to Manage the Risk

On October 13, 2026, eight companies made up 37.56% of the SPDR S&P 500 ETF Trust (SPY), the largest index fund in the world. Nvidia alone was 8.22%, Apple 7.41% and Microsoft 6.00%. Put differently: of every $100 in an S&P 500 fund, about $38 sits in eight stocks and $62 is spread across the other 490-odd. Those eight are the Magnificent 8. If you work at one of them, the number that matters is higher still. For the options structures that manage this risk, the hub is options strategies for Mag 7 stocks.

What are the Magnificent 8 stocks?

The Magnificent 8 are Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, Tesla and Broadcom. The first seven are the original “Magnificent 7”, a label coined in 2023 for the mega-cap tech stocks that drove most of the market’s gains. “Mag 8” adds Broadcom, the chip and software company whose AI business pushed it into the same size range.

The group is not an official index. It is market shorthand, and some writers use other eighth members. On Proflex, “Mag 8” always means the Magnificent 7 plus Broadcom, the same definition used in our Mag 8 earnings-move study.

Why is Broadcom part of the Mag 8?

Broadcom is in the group because it grew into the same weight class. On October 13, 2026 its SPY weight was 2.53%, larger than Meta (2.50%) and Tesla (1.57%), both original Magnificent 7 members. Leaving it out would mean ignoring a bigger index weight than two names already in the club.

The growth came from the same source as Nvidia’s: AI infrastructure. Broadcom designs custom accelerators for the largest cloud companies and sells much of the networking silicon that links AI clusters together. That makes it, along with Nvidia, a direct play on data center spending. It also means the Mag 8 is more concentrated in one theme than the Mag 7 was: two of the eight now sell picks and shovels to the other six.

For options traders, Broadcom behaves like a Mag 8 name too. Its average earnings-day reaction over the last five years was 7.2%, among the largest in the group, and its options are among the most actively traded single-stock contracts.

How much of the S&P 500 do the Mag 8 make up?

About three-eighths. Chart 1 shows the eight SPY weights on October 13, 2026: together 37.56%, with Nvidia, Apple and Microsoft alone at 21.6%.

That level of concentration is unusual. Today the top ten holdings in SPY are the eight Mag 8 names (nine lines, because Alphabet has two share classes) plus Micron at 1.60%, so the index’s leadership is almost entirely one group of technology and AI companies.

Concentration changes what “the market” is. When people say the S&P 500 rose 1% today, a large part of that is often a handful of these names. When one of them misses on earnings, the index can fall even if most stocks rise. And because the Nasdaq-100 is even more concentrated in the same stocks, owning QQQ adds more of the same exposure rather than diversifying it.

Why is Mag 8 concentration a bigger risk for tech employees?

Because your salary, your RSUs and your index fund all point at the same few companies. A Mag 8 employee already depends on one company for income and future grants. Vested RSUs add a direct stake. Then the 401(k) target-date fund or brokerage index fund adds the same stock again through its index weight.

Chart 2 adds it up for a hypothetical Nvidia engineer with 40% of liquid net worth in vested RSUs and 60% in an S&P 500 fund. Direct Nvidia is 40%. The fund adds another 4.9% of Nvidia and 17.6% in the other seven names. Total Mag 8 exposure is 62.5%, and total Nvidia exposure is 44.9%. On paper the person “owns the whole market”; in practice they own a tech portfolio.

The same arithmetic works for any employer in the group. A Meta or Tesla employee has smaller look-through exposure from the index fund, because those weights are lower, but their single stocks also move more. Meta’s average earnings-day move was 10.9% over the last 20 reports, the largest in the group.

How do you calculate your look-through Mag 8 exposure?

Multiply each fund holding by its Mag 8 weight and add your direct shares. The steps:

1. List every account: brokerage, 401(k), IRA, ESPP, vested RSUs, and your spouse’s accounts.
2. For each fund, look up its current holdings page and note the weight of each Mag 8 stock.
3. Multiply the fund value by each weight. A $300,000 S&P 500 fund holds about $24,700 of Nvidia at an 8.22% weight.
4. Add direct holdings of each stock, including vested but unsold RSUs.
5. Divide each total by liquid net worth. Flag any single stock above 10% to 15% and the Mag 8 total above 50%.

Unvested RSUs are not in the total, but they are a reason to keep the vested position smaller: future grants will add exposure whether you want it or not.

How can options help you manage a Mag 8 basket?

Options let you change the shape of your exposure without selling: a floor under the largest holding, income from the shares you keep, or protection on the index component. Each tool solves a different part of the problem, and Chart 3 compares them.

Collars on the largest single holding. If one stock is most of the risk, buy a put below the price and sell a call above it. At strikes around 90% and 115% for 90 days, the call often pays for most of the put. The collar strategy guide covers strike choice and the Section 1259 constructive-sale limit.

Covered calls while you diversify. Selling calls on part of the position earns premium each month while you sell down on a schedule. It does not protect much against a big drop, so pair it with a plan to cut the position.

Index puts for the market leg. A put on SPX or QQQ protects the part of your portfolio that moves with the market. It is cheap per dollar covered and needs one trade, but it does nothing if your employer falls 30% on its own news while the index holds. Our guide to hedging a stock portfolio with options explains that basis risk.

For a stock-by-stock version of the playbook, the deepest example is Nvidia, the largest weight: see Nvidia options strategies.

Why do Mag 8 stocks have the most liquid options?

Because size attracts trading, and trading attracts market makers. The Mag 8 are the most widely held stocks in the world, so they have the most hedgers, income sellers and speculators. Nvidia alone averaged about 3.5 million contracts a day as of July 31, 2026, Tesla 2.6 million and Apple 1.5 million, according to TradeStation.

All eight are in the exchanges’ penny pricing program, which allows quotes in one-cent steps on options priced under $3, and since January 2026 the largest stocks can also list Monday and Wednesday expirations on Nasdaq ISE. For an investor, the practical result is a small cost to trade: near-the-money spreads are often a few cents on options worth several dollars. That edge disappears on far out-of-the-money strikes and long-dated LEAPS; our guide to options bid-ask spreads and liquidity shows how to check a quote before you trade.

Is the Mag 8 a better way to think about the market than the Mag 7?

For risk purposes, yes. The Mag 7 was a useful label in 2023, when those seven drove most of the index’s return. Since then, AI infrastructure has become the common thread, and Broadcom is as much a part of it as Nvidia. Counting it gives a more honest picture of how much of an index portfolio rides on one theme.

The bigger point is that the members are not fixed. Market leaders change. A decade ago, the largest weights included energy and bank stocks that are now far down the list. Treat the Mag 8 as the current concentration, check the weights at least once a quarter, and size your positions so that a 30% to 40% drop in the group, which has happened before in tech bear markets, would not change your plans.

What should you do about your own Mag 8 exposure?

1. Count it. Run the look-through calculation across every account.
2. Set limits. A common starting point is no single stock above 10% to 15% of liquid net worth, and the Mag 8 total below half.
3. Plan the sell-down. Use a schedule, tax lots and, for insiders, a 10b5-1 plan.
4. Protect the largest holding while you sell, with a collar or puts.
5. Earn on what you keep with covered calls at strikes you would be happy to sell at.
6. Diversify new money away from tech-heavy funds, for example equal-weight, value or international funds.
7. Review quarterly, because weights move every day.

Frequently asked questions

Key takeaways

1. The Mag 8 are the Magnificent 7 plus Broadcom: Apple, Microsoft, Alphabet, Amazon, Meta, Nvidia, Tesla and Broadcom.
2. On October 13, 2026 they were 37.6% of the SPDR S&P 500 ETF; Nvidia alone was 8.22%.
3. An index fund is not diversification away from the Mag 8; it is a large bet on them.
4. A tech employee with 40% in employer RSUs and 60% in an index fund can have more than 60% of net worth in eight stocks.
5. Count look-through exposure: direct shares plus each stock’s index weight times your fund holdings.
6. Use single-stock tools (collars, covered calls, staged sales) for single-stock risk; index puts only cover the market leg.

Sources and method

1. State Street Global Advisors, SPDR S&P 500 ETF Trust (SPY) holdings — top-10 weights as of October 13, 2026
2. Nvidia Form 10-Q for the quarter ended July 26, 2026 (SEC EDGAR) — the May 18, 2026 dividend increase to $0.25 a quarter
3. TradeStation, What Are the Top Stocks for Options Trading? — single-stock options volume as of July 31, 2026
4. SEC Investor.gov, Asset allocation, diversification and rebalancing — why diversification across holdings matters
5. 26 U.S. Code § 1259, Constructive sales treatment — tax limits on tight hedges of appreciated stock

Index weights are SPY fund holdings published by State Street for October 13, 2026; the S&P 500 index weights differ slightly and both move daily. Alphabet combines its Class A and Class C shares. The look-through portfolio in Chart 2 is hypothetical. Daily-move and options-volume figures come from the sources cited and from Proflex calculations on daily closes. Not investment or tax advice.