What if AI fails?

AI-related companies now dominate major stock indexes, making portfolio diversification increasingly difficult, according to investment experts. ECB economists have warned that the AI-driven rally could eventually lead to a market correction, particularly as exposure extends beyond technology and chipmakers to data centers, utilities, emerging markets and commodities such as copper.

Market concentration is already high: 10 technology and semiconductor companies account for 35% of the S&P 500, while three chipmakers generated 60% of the MSCI Emerging Markets Index’s return over the past 12 months.

Investors are therefore looking for areas with less AI exposure. Europe is one option, with only about 8.5% of its market concentrated in AI-related stocks. India and traditional consumer sectors are also seen as potential diversification opportunities if enthusiasm for AI weakens.

(pb.pl)