For a while now, we’ve been hearing how artificial intelligence (AI) is reshaping the investment landscape.
Much of the growth has come from a small group of stocks; specifically, the Mag 7: Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.
Their recent performance has been remarkable, driving an outsized share of the S&P 500’s gains.
Here’s a look at the Mag 7’s performance since the 2025 market low in early April:
Still, with so much riding on so few companies, market concentration is a real concern.
While AI presents exciting growth opportunities, it’s important to diversify within the AI sector itself, beyond just the largest players. This helps capture a broader range of innovation and mitigate risk.
For Example:
Diversification could include niche players and startups focused on AI in healthcare, finance, robotics and cybersecurity, or hardware manufacturers supporting data center expansion for AI workloads.
What’s more, you can diversify based on customer adoption cycles, e.g., AI in logistics or biotech may ramp up at different times than AI in social media or e-commerce.
Your Portfolio & Diversification
One of our key roles is to help ensure your portfolio isn’t overly reliant on any one company or sector. We stay diversified by spreading across industries, incorporating global opportunities and maintaining a mix of stocks, bonds and alternatives (e.g., real estate funds) to manage risk and support long-term growth.
Also, we review 20-to-30 accounts daily, adjusting holdings to maintain target asset allocations. This helps ensure your portfolio is aligned with your investment goals and market conditions.
To learn more, read our investment philosophy statement: A Disciplined, Research-Driven Approach to Investment Success.
Related: We discussed the Mag 7 earlier this year in our post: S&P 500 Shifts From Home Runs to Singles and Doubles.
–David Bunker, Financial Advisor & Licensed Fiduciary
Before You Go
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This communication was prepared with financial writer Sharron Senter’s assistance, based on interviews with David Bunker, a financial advisor and licensed fiduciary.
Source:
1: Morningstar, These Are the Best Mag Seven Stocks to Consider for AI Investing, https://www.morningstar.co.uk/uk/news/266066/these-are-the-best-mag-seven-stocks-to-consider-for-ai-investing.aspx