AI has taken over Wall Street. Should it take over your portfolio too?
Subscribe to enjoy similar stories. The extraordinary rally in US technology stocks over the past few years, especially those linked to artificial intelligence, has left investors wondering whether they are witnessing the formation of another classic market bubble. For Indian investors, the concern is sharper because most international exposure from the country is concentrated overwhelmingly in US equities, particularly Nasdaq-heavy funds.
While exposure to the world’s largest economy remains important, the current environment suggests that investors need to think more broadly about global diversification, rather than anchoring portfolios to a single market and a single theme. The US market rally has increasingly become a narrow one, powered by a small group of AI-linked mega-caps. While mega-caps are defined as the companies with over $200 billion market capitalization, 10 US stocks currently hold a market cap of over $1 trillion each.
These include names like Nvidia Corp., Apple Inc., Alphabet Inc., Microsoft Corp., Meta Platforms Inc., etc. Over the last three to four years, these companies have surged on the back of aggressive spending on data centres, chips, and computing infrastructure. The scale of this concentration is unprecedented.
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