AI’s Massive Growth Forces Investor Involvement

The End of the 60-40 Investment Rule

For decades, the golden rule of investing was straightforward: allocate 60% of your portfolio to stocks for growth and 40% to bonds for stability. However, this long-standing framework is now considered obsolete. Torsten Slok, chief economist at Apollo, has declared that the classic 60-40 approach is officially dead. Instead, he suggests a new paradigm: the “AI vs. non-AI” divide.

Slok highlighted in a slide deck shared with Daily News Lite that exposure to the artificial-intelligence boom has become nearly impossible to avoid. This theme has not only dominated the stock market but has also infiltrated corporate credit and venture capital. As a result, many investors who aimed for a diversified portfolio may not realize how heavily they are exposed to AI.

Concentration in the S&P 500

The top 10 companies in the S&P 500 already account for about 40% of the index’s value. Among these, nine have businesses tied to AI, with the exception being drugmaker Eli Lilly. Similar concentration levels can be seen in foreign markets, particularly in emerging markets where semiconductor companies in Taiwan and South Korea dominate major indexes.

Here is a breakdown of the weightings of the top 10 stocks in the S&P 500:

• Nvidia – 7.50%
• Apple – 6.80%
• Alphabet – 6.40%
• Microsoft – 4.20%
• Amazon.com – 3.90%
• Broadcom – 2.80%
• Meta Platforms – 2.50%
• Tesla – 2.30%
• Eli Lilly – 1.70%
• Micron Technology – 1.60%

Source: Apollo

AI’s Impact on Credit and Venture Capital

Credit and venture-capital investors are pouring historic amounts of capital into the AI theme. In 2026, nearly all net new venture investment has flowed to AI-related companies. Meanwhile, in the investment-grade bond market, AI infrastructure now accounts for nearly half of all net new bond issuance. Here is a comparison of AI and non-AI issuance:

• Investment grade: 49% AI, 51% non-AI
• Venture capital: 87% AI, 13% non-AI
• High-yield: 38% AI, 62% non-AI

Source: Apollo

Broader Economic Implications

Even those who don’t own assets are likely more exposed to the AI investment theme than they realize. If the AI boom falters, the consequences could affect both investors and ordinary consumers. Over the past few years, the race for AI dominance between the U.S. and China has evolved from an investment trend into a macroeconomic risk.

Slok expects that the money poured into the AI data-center buildout will drive about half of the 2% real GDP growth expected for the U.S. economy in 2026. However, the big risk is that the technology fails to deliver the hoped-for results—such as a dramatic boost to worker productivity and corporate profit margins.

So far, the only companies making money off AI are those that produce the semiconductors and equipment needed to power and operate AI data centers. Slok emphasized that for the broader market, including the 493 companies in the S&P 500 that aren’t part of the “Magnificent Seven,” the success of AI must translate into significant productivity gains and earnings growth.

Market Sentiment and Risks

If the data-center buildout were to slow, the economic impact could be widespread. A sharp decline in asset values might quickly spill over into the real economy. Since the COVID-19 pandemic, the wealth effect has played an increasingly important role in driving U.S. consumption.

Despite an AI-driven momentum trade hitting the rocks in July, investor appetite for AI-related assets remains robust. According to Rob Haworth, senior strategist at U.S. Bank Wealth Management, the S&P 500 hasn’t seen a significant pullback, suggesting that investors are shifting money into other parts of the market rather than pulling it out entirely.

Mark Hackett, chief market strategist at Nationwide, noted that the index finished Wednesday roughly half a percentage point short of its most recent record finish in early June. Haworth added that market sentiment indicates strong demand, with credit spreads not widening, meaning investors aren’t being scared away by the debt issuance. He concluded that the story is still strong.