Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTAditi GangulyThu, July 16, 2026 at 1:10 PM GMT+2 10 min readJung Yeon-je/AFP via Getty ImagesMoneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.Diversification has been a cornerstone of responsible investing practice for decades, but may be more crucial than ever in the midst of the stock market's continued bull run, experts say.As analysts point out that positive stock market returns over the last few years have largely been thanks to a few outperforming tech companies (1), which many argue are overvalued, other patterns are emerging that could spell trouble for the average portfolio.Must ReadThat includes, as illuminated by veteran Wall Street commentator Jim Paulsen this week, higher general risk (and a severe dearth of traditional risk aversion) across indexes."Among all the AI excitement, investors have increasingly allowed the degree of risk aversion to fade from their portfolios," Paulsen wrote in a July 2 post to his Substack (2), where he shares market insights informed by his 40-year career as a strategist."What is becoming clear is that the S&P 500 index – and probably most portfolios — is becoming much riskier … [and] with risk aversion increasingly [missing], the chance of disappointing results has increased."The unseen tech exposureOf primary concern to the everyday investor is that even if you're not one to jump on the chip bandwagon or cancel your life insurance to invest it in tech ETFs (3), the very nature of America's indexes right now leaves you more exposed to the potential fallout from an AI bubble than you may realize.Many popular broad market index funds, such as those based on the S&P 500, are now about 40% weighted in tech (4). Alphabet [NASDAQ:GOOG], Amazon [NASDAQ:AMZN], Microsoft [NASDAQ:MSFT] and Meta [NASDAQ:META] — perennially in the S&P's top 10 — are expected to put a collective $700 billion into artificial intelligence this year alone (5), meaning you're likely in the AI game, like it or not.Holdings across multiple ETFs won't help, either, as they all overlap (6). And even funds billed as "international" are still heavily reliant on the U.S. market and economy,Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info