Investors Pivot to Hedge Positions as AI Concentration Dominates Market Valuations

Fund managers are turning to hedge funds and emerging markets as a shield against concentrated exposure to artificial intelligence stocks that now account for roughly half of the S&P 500's market value. The shift reflects growing unease among investors that heavy bets on megacap AI companies have created portfolio risks unseen in modern market history, with the so-called Magnificent Seven alone representing 34% of the index's total market value as of mid-2026.