Worried About AI Stocks? Your Best Move Might Be: Do Nothing.

Many investors are currently concerned that the stock market has become overly reliant on artificial intelligence (AI) stocks. The S&P 500 index includes around 45% of tech companies and AI-related firms. According to Goldman Sachs research, approximately half of the earnings per share (EPS) growth in the S&P 500 since 2026 has come from corporate investments in AI, such as the expansion of data centers.

However, some analysts and economists have warned that AI companies have invested hundreds of billions of dollars in semiconductors, memory chips, and data centers, which may be too costly and may not yield returns for investors. If you're worried about an AI stock crash and bear market in 2027, the best course of action might be to do nothing.

Even if you believe AI is overhyped, the S&P 500 could still be overvalued, or AI stocks could continue to decline. Long-term investors should stay humble about their ability to predict the future while remaining confident in the stock market's resilience. Holding onto a diversified portfolio of stocks, like an S&P 500 ETF, for five years or more is often the best move during market turmoil.

The stock market's future is uncertain, with potential outcomes ranging from an AI sector overvaluation to new investment themes or global events affecting the market. Regardless of the outcome, the S&P 500 has historically bounced back, delivering long-term returns of around 9.98%. If you're concerned about AI stocks, consider diversifying your investments beyond the tech sector or ETFs tracking the tech-heavy Nasdaq-100.

Maintaining a broad stock market index fund like the Vanguard S&P 500 ETF has delivered annualized returns of about 12% over the past five years, despite a 18.2% decline in 2022. The future of AI might be fine, and even if a bear market occurs in 2027, the stock market's resilience should be remembered.