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1/5 The S&P 500 increasingly looks like two stock markets: AI-related companies and everybody else. 41 AI-related companies we track accounted for 48.68% of the S&P 500's combined market capitalization. The remaining companies accounted for 51.32%. https://t.co/owS3WGJiom 2/5 No list of AI-related companies is perfect. We use a classification drawn from J.P. Morgan’s Michael Cembalest: 29 direct-AI companies, eight utilities, and four capital-equipment companies. https://t.co/vo1URxGceM 3/5 We recreated the concentration chart from Michael Hartnett’s BofA Flow Show. We replaced the current-period (green) with our broader 41-company basket. At roughly 49%, its share exceeds the peak concentration of every episode shown except the 19th-century railroad boom. https://t.co/dGF0TixYIa 4/5 Concentration is only part of the story. Over the past year, the rolling 6-month correlation (green) has turned slightly negative. Another sign that the headline index conceals two different market experiences. https://t.co/HDiCAqPo3a 5/5 Diversification across company names and diversification across investment themes aren't necessarily the same. Concentration risk means half the index is exposed to the AI theme. Half is not. The choice is not necessarily to go all-in on AI or all-in against it. It is about recognizing the exposure already embedded in a broad-market investment and deciding whether you want it. Follow up