ITOT’s 37% Concentration in Top Ten Holdings Could Make or Break 2026 Returns

The iShares Core S&P Total U.S. Stock Market ETF (NYSE:ITOT) has been a strong performer, returning 16.4% through mid-December 2025. With tech stocks leading the charge and the fund trading near its peak, investors are wondering if another year of double-digit returns is on the horizon or if the easy gains have already been made.

Analysts are projecting an 11% growth in S&P 500 earnings for 2026, which will be a key factor in determining ITOT’s performance next year. If this forecast holds true, ITOT could see price appreciation in the high single digits to low double digits, along with an additional 1% from dividends.

However, there are risks to consider. Fourth quarter 2025 earnings are expected to grow just over 8%, signaling a potential slowdown. If this trend continues into 2026, hitting the 11% growth target may prove challenging. Keeping a close eye on quarterly earnings reports, especially from mega-cap tech companies like Nvidia, will be crucial in assessing profit growth.

ITOT holds over 3,600 stocks, but its top 10 holdings represent 37% of assets, with Nvidia alone accounting for 7.3%. The fund’s heavy concentration in tech, making up 33% of its portfolio, was a boon in 2025 as tech stocks surged. However, if the market shifts towards smaller companies or value stocks in 2026, ITOT’s tech-heavy weighting could lag.

Nvidia, in particular, reported a remarkable 62% revenue growth in its latest quarter, driven by strong demand for AI chips. Monitoring Nvidia’s quarterly reports and any signs of a slowdown in AI infrastructure spending by cloud providers will be essential in assessing ITOT’s performance.

ITOT’s quarterly dividend recently increased by 4% year-over-year, reflecting steady corporate cash generation. With a low expense ratio of 0.03% and $80 billion in assets, the fund offers tight tracking and low trading costs.

In comparison, the Vanguard Total Stock Market ETF (NYSE:VTI) offers similar exposure with an identical expense ratio but holds $450 billion in assets, providing deeper liquidity for large trades. Ultimately, the choice between ITOT and VTI may come down to personal preference.

As investors look ahead to 2026, the key to ITOT’s performance will be whether corporate earnings can meet expectations, with Nvidia’s trajectory serving as a crucial indicator to watch. Monitoring quarterly reports and staying informed on market trends will be essential for navigating the ever-changing landscape of the stock market.