If you own an S&P 500 index fund, you probably think of yourself as a diversified investor. After all, 500 companies — how concentrated could it be?

Pretty concentrated, it turns out.

The 10 largest companies in the S&P 500 now account for over 40% of the entire index — a level of concentration not seen since the 1960s. And eight of those ten names are deeply tied to the same theme: artificial intelligence. NVIDIA alone represents nearly 8% of the index. That means a single earnings miss at one company can meaningfully move your entire “diversified” portfolio.

As RBC Wealth Management recently noted, what was once a representative cross-section of the U.S. economy has slowly become something else entirely — a concentrated bet on whether AI delivers on its promise.