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Your portfolio may be more tech-heavy than you think
If you own an S&P 500 index fund, artificial intelligence is already a major part of your investment strategy.
In recent years, the stock market’s gains have been fueled largely by a small group of tech giants that are aggressively investing in AI.
Nvidia, Microsoft, Apple, Google parent company Alphabet and Amazon — the five biggest names in the S&P 500 — now represent nearly 30% of the entire index. And that concentration is reshaping the way investors experience diversification.
“Many people aren’t aware how their retirement portfolio performance or taxable account portfolio performance is really dependent upon the success of these five companies,” said certified financial planner Kamila Elliott, CEO of wealth management firm Collective Wealth Partners in Atlanta. She is also a member of the CNBC Financial Advisor Council.
‘Set-it-and-forget-it’ strategy is ‘no longer applicable’
For decades, investing in exchange-traded funds or mutual funds that follow the S&P 500 was seen as a relatively low-risk way to grow wealth over time. Market legends like Warren Buffett and Vanguard founder Jack Bogle famously endorsed “set-it-and-forget-it” strategies using low-cost index funds.
But that approach may not be as diversified as it once was.
“I think ‘set-it-and-forget-it’ is no longer as applicable,” said Elliott. “If your entire portfolio for retirement is in the S&P 500, regardless of what’s happening in the AI market, it really isn’t well diversified.”
“The S&P 500 is still diverse for sure,” said CNBC FA Council member John Mullen, president and CEO of Parsons Capital Management in Providence, Rhode Island. The firm ranked No. 1 on CNBC’s Financial Advisor 100 list for 2025.
“You still have 500 names that make up the index,” he said. “It is, however, much more concentrated than it has been throughout most of its history.”
That shift is largely due to the index’s structure. The S&P 500 is market-cap weighted, meaning companies with larger valuations carry more influence over the index’s performance. As stock prices for AI-linked companies soar, their market caps grow.
While some strategists see that trend as a potential risk to investors, others view it as an opportunity.
“I think tech continues to lead the market higher and that ultimately has really changed the game for investors,” said Dan Ives, managing director at Wedbush Securities.
“We’re living in a fourth industrial revolution, and I think the market is starting to reflect that,” Ives added. “It’s an exciting time to be an investor in U.S. tech.”
Watch the video above to learn how to navigate the S&P 500’s historic concentration in AI stocks and how you can diversify your portfolio.
