Overview
- The S&P 500 now functions as a proxy for AI, with a State Street strategist saying that reflects the technology’s sweeping potential.
- Alphabet surpassed $4 trillion in market value, joining Nvidia in a small club of AI leaders that now dominate index weights.
- Market-cap weighting has left many supposedly diversified funds heavily tilted to the top names, including examples with about 30% in the eight biggest holdings.
- Interlocking investments and dependencies among Big Tech and AI startups, plus widespread reliance on Nvidia chips, heighten the risk of a broader selloff if leaders stumble.
- Suggested countermeasures include equal-weight index funds, small- and mid-cap exposure, international and value allocations, real assets, and disciplined rebalancing.