Glossary
Sector
A sector label, such as the one many stock pages show, tells you which part of the economy a company mostly earns its money in. It is a classification, not a rating.
A sector is a broad group of companies that share a main line of business, such as Energy or Health Care. One widely used system, GICS, sorts companies into 11 sectors based mainly on where their revenue comes from.
Quick answer
A stock sector is a group of companies with a similar main business. The GICS system, built by S&P Dow Jones Indices and MSCI in 1999, has 11 sectors and assigns each company mainly by the activity that generates its revenue [1].
Key points
On this page
What are the 11 stock sectors?#
One widely used system is the Global Industry Classification Standard (GICS), which S&P Dow Jones Indices and MSCI jointly developed in 1999 [1]. As of its April 2026 methodology, GICS has four levels: 11 sectors, 25 industry groups, 74 industries and 163 sub-industries [1]. The sector is the broadest level.
The four GICS levels, from broadest to narrowest, with the count at each level [1]:
| GICS level | How many |
|---|---|
| Sectors | 11 |
| Industry groups | 25 |
| Industries | 74 |
| Sub-industries | 163 |
S&P DJI GICS methodology, April 2026 [1].
The 11 sectors, as listed in the methodology [1]:
- Energy
- Materials
- Industrials
- Consumer Discretionary
- Consumer Staples
- Health Care
- Financials
- Information Technology
- Communication Services
- Utilities
- Real Estate
How is a company assigned to a sector?#
By its main business, measured mostly by revenue. GICS classifies a company according to its principal business activity, and S&P DJI and MSCI use revenue as the key measure, while also treating earnings and market perception as relevant [1]. A company is initially placed in the sub-industry whose business generates more than 60% of its total revenues [1]. If no activity reaches 60%, it goes to the sub-industry with the largest share, at least 50%, of both revenues and earnings; failing that, to the activity with the largest combined contribution to revenues and earnings [1]. The sector follows from the sub-industry, because the system is strictly hierarchical and a company can only be in one grouping at each level [1]. Classifications are reviewed annually [1].
The SEC uses a different system for its own work. The Standard Industrial Classification (SIC) codes in a company's EDGAR filings indicate its type of business, and the SEC uses them to decide which office reviews the filings [2]. For example, code 3571 is Electronic Computers and code 2080 is Beverages [2]. A SIC code and a GICS sector can describe the same company differently.
Why do sectors matter to an investor?#
Because owning several companies from one sector is a narrower bet than owning the same number spread across sectors. FINRA describes diversification within stocks as owning companies of different sizes, in different sectors such as technology, consumer and healthcare, and in different countries [3]. The SEC's beginners' guide likewise suggests investing in a wide range of companies and industry sectors [4]. Read diversification explained for the full picture. Our guide on how to read a stock quote covers the other labels you will meet on a stock page.
A sector label is not a quality signal. It says what a company does, not whether its stock is a good or bad investment. Our index funds explainer shows how broad funds spread money across sectors automatically.
Frequently asked questions#
Can a company change sectors?
Yes. GICS classifications are reviewed annually and monitored for corporate actions that could change a company's classification [1], for example after a merger or a shift in its main business.
Is a sector the same as an industry?
No. In GICS the sector is the broadest of four levels; below it sit industry groups, industries and sub-industries [1]. An industry is a narrower slice inside a sector.
The bottom line#
A sector tells you where a company mainly earns its money. GICS sorts companies into 11 sectors using a revenue-based rule, and the SEC's SIC codes are a separate system. Use sectors to check that your stocks are not all exposed to the same part of the economy, and continue with diversification explained.
Sources
Education only. This page is not investment, tax or legal advice. Stocks can lose value. See our risk disclosure.
