AI Stocks Are Creating a Sneaky Risk for S&P 500 Investors, and History Is Flashing a Warning Signal
Tech companies are dominating the market. That could be risky for investors.
Overview
The S&P 500 (SNPINDEX: ^GSPC) has been working overtime the last few years, earning total returns of nearly 18% over the last 12 months alone -- far above its historic average of around 10%.
Advancements in artificial intelligence (AI) can be credited for much of the market's recent success. The technology sector within the S&P 500 has surged by a whopping 46% over the last six months, while all other industries combined have a total return of around 11% in that time.
Details
However, here lies the risk for investors. As company valuations surge, the largest stocks are making up a historically significant portion of the broader market. When those stocks are thriving, they can lift the market to new heights. But if they stumble, they might bring the rest of the market down with them.
Source
Originally published at www.fool.com.