Artificial intelligence (AI) is the trade of the decade. It turned NVIDIA (NASDAQ: NVDA) into a household name. But the AI trade goes beyond NVIDIA. Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL), and Meta Platforms (NASDAQ: META) have reoriented their entire capital expenditure stories around AI infrastructure.
However, the S&P 500 has become so top-heavy with mega-caps that passive index investing now carries more concentration risk than many retail investors realize. In fact, at this point, if investors own the index through a vehicle like The SPDR S&P 500 ETF Trust (NYSEARCA: SPY), they already have significant AI exposure. The question is whether that exposure is intentional, diversified, and sized appropriately for individual investors’ risk tolerance.
