Morningstar's September 2026 quarterly reconstitution, completed on Sept. 23, underscored the market-moving impact of SpaceX's record-breaking initial public offering. The rocket maker, which listed on June 12, 2026, and entered the Morningstar US Total Market Index six trading days later via the firm's fast-track process, ranked among the ten largest U.S. companies by market cap at the September ranking date.
SpaceX's arrival as a mega-cap constituent—joining Nvidia, Apple, and Microsoft—lifted the mega/mid-cap breakpoint to $99.6 billion, a 5.7% increase from June. Without SpaceX, the breakpoint would have risen only 3.7% to roughly $97.7 billion, according to the reconstitution report authored by Alexander Poukchanski, Morningstar's director of index analytics.
Concentration at historic highs
The top ten companies in the Morningstar US Total Market Index now represent about 35.1% of the index, essentially flat from June but still historically elevated. Nvidia leads with a 7.1% weighting, followed by Apple at 6.3% and Microsoft at 5.0%. Alphabet slipped from 5.5% to 4.8% as Microsoft gained ground.
The number of mega-cap companies fell to 165, the lowest in a decade, as rising concentration compresses the segment. When a mega-cap IPO of SpaceX's scale enters, it raises the breakpoint, pushing smaller companies into lower capitalization tiers—a cascading effect that advisors increasingly navigate. This trend aligns with growing advisor interest in equal-weight strategies to mitigate concentration risk.
Muted index impact, but turnover still notable
SpaceX's effect on index turnover was slightly less than anticipated. Mega-cap reconstitution turnover rose by approximately 9.5 basis points, below Morningstar's 10-basis-point estimate, while mid-cap turnover increased by about 104 basis points, under the 108-basis-point projection. The firm credits its banding and packeting methodology, which phases in changes by moving 50% of a company's float-adjusted market cap at a time.
Value and small caps extend winning streak
Beyond SpaceX, the September period reinforced the benefits of diversification across market-cap segments. Micro-cap stocks outperformed both the total market and mega-caps for the fourth consecutive quarterly ranking. The Morningstar US Micro Cap Index returned 6.72% between the June and September ranking dates, versus 4.80% for mega-caps. Year-to-date through September, micro-caps gained 21.80%, compared with 13.29% for mega-caps.
Value also outperformed growth across all cap segments for the fourth straight quarter, a sustained reversal from the growth-dominated decade. The cumulative value advantage was largely driven by the December 2025–March 2026 period, with the margin moderating since.
Notable reclassifications
Seagate Technology and Western Digital moved fully into mega-cap, reflecting AI-driven gains. Moderna initiated a packet from small-cap to mid-cap after surging more than 200% between ranking dates. On the style side, over 100 securities changed growth/value classifications. Intel packeted toward growth, while McDonald's, Uber, Adobe, and Intuit moved toward value. Dell Technologies packeted toward growth in large- and core-cap indexes but not mega-cap.
Honeywell's treatment illustrated corporate-action complexity: following Quantinuum's June 4 listing and Honeywell Aerospace's June 29 spinoff, both new entities were added to indexes to fully capture the original investment.
Looking ahead
Morningstar flags upcoming mega-cap IPOs—Anthropic and OpenAI—as potential drivers of further concentration. Advisors are already urging pre-listing concentration planning for clients. As private market allocations hit records amid AI concentration worries, the debate over index design and diversification intensifies.
