AI Titans' Command of the Market Fuels Overcrowded Investments and Concerns of a Bubble

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AI Titans' Command of the Market Fuels Overcrowded Investments and Concerns of a Bubble

Bitget-RWA2025/11/18 14:34

By:Bitget-RWA

- Bank of America's survey reveals 54% of fund managers view FAAMG+T as the most crowded trade, surpassing gold , driven by AI's influence and Magnificent Seven dominance. - The seven tech giants (Alphabet, Amazon , Apple , Meta , Microsoft , Nvidia , Tesla) now account for 21.5% of S&P 500 weight and 26% of its net income over 12 months. - AI-driven investments surge, with Nvidia's CUDA platform (4M developers) and Tesla's 1M Optimus robot target highlighting sector concentration and growth expectations.

The strategy known as "Long FAAMG+T," which involves investing in the seven leading U.S. tech giants, has emerged as the most popular trade in November,

based on the latest Global Fund Manager Survey by Bank of America

. According to the survey, 54% of participants now see this position as the most overextended, surpassing gold as the most crowded trade. This change highlights the increasing impact of artificial intelligence (AI) and the ongoing dominance of the so-called "Magnificent Seven," who continue to influence global financial markets.

The FAAMG+T cohort—which includes Alphabet,

Amazon

Apple

Meta

Microsoft

Nvidia

, and Tesla—has consistently attracted both institutional and individual investors. Together, they now make up more than 21.5% of the S&P 500’s total market value, with

Nvidia, Apple, and Microsoft alone representing a large share

. The recent boom in AI technology has only increased their attractiveness. For example,

Tesla has set a goal to manufacture 1 million Optimus humanoid robots by 2030

, while

Nvidia’s AI processors are powering initiatives such as Oracle’s $40 billion data center expansion

. These advancements have raised hopes for continued revenue growth, though some experts caution about the possibility of a speculative bubble similar to the dot-com era

as noted by market analysts

AI Titans' Command of the Market Fuels Overcrowded Investments and Concerns of a Bubble image 0

Market concentration has reached new heights.

The top 10 companies in the S&P 500 now account for 41% of the index’s total value

, the highest level since 1972. This is largely due to the Magnificent Seven’s substantial earnings.

In the last year, these companies generated 26% of the S&P 500’s overall net profits

. Still, experts warn that such heavy concentration can be risky.

Torsten Slok, Apollo’s chief economist, pointed out that upward revisions in earnings forecasts for the Magnificent Seven are now the only factor

driving improved S&P 500 outlooks. If these companies falter, it could have widespread effects on the market.

At the same time, the AI surge has triggered a wave of investment activity.

Reports indicate that Tether is weighing a $1 billion investment

in German robotics firm Neura, while

Jeff Bezos and other tech leaders are jointly backing a $6.2 billion AI infrastructure project

. These investments signal strong belief in AI’s disruptive power and also reveal how interconnected the sector has become.

Nvidia’s leadership in AI hardware, for example, is supported by its CUDA platform

, which has attracted 4 million developers—a major edge over competitors like AMD and Huawei.

This crowded trading environment brings its own set of challenges. As more investors pile into the same stocks, both volatility and liquidity risks can increase.

Bank of America’s research indicates that a downturn in the Magnificent Seven could spark

a broader selloff in the market, especially if earnings growth slows or new regulations emerge. For now, though, the promise of AI-fueled expansion and the sheer size of these tech leaders continue to attract investors.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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