The S&P 500 Is Dominated by AI. If the Bubble Pops, History Says These 2 ETFs Could Be the Smartest Buys.
If your portfolio feels too tech-heavy, buying energy stocks and bonds could help protect your cash from a downturn.
The S&P 500 Is Dominated by AI. If the Bubble Pops, History Says These 2 ETFs Could Be the Smartest Buys.
Overview
The artificial intelligence (AI) trade has taken over the stock market. It's not just major tech players and semiconductor stocks. A wide range of U.S economic sectors, like industrial stocks, are now growing because of the AI boom.
According to recent research from Bloomberg, AI-related stocks are now responsible for about 53% of the S&P 500 index by weight. If AI technology can lead to widespread productivity gains throughout the economy, this AI-centric stock market doesn't have to be a problem. But in case of a downturn in the S&P 500, this top-heavy weighting toward AI-related stocks might mean that there won't be many safe places for investors to hide.
Details
Is there any alternative to investing in AI within the S&P 500, or to diversify your investments away from a possible tech bear market? Based on Bloomberg's research, buying more energy stocks and U.S. Treasury bonds might be good choices to reduce volatility without missing out on most of the S&P 500 index's returns.
Source
Originally published at www.fool.com.
