The leading 10 companies in the United States account for approximately 40% of the market capitalization of the S&P 500.
2 Despite the high level of market concentration, it is noteworthy that similar periods of industry dominance in sectors such as finance or energy have persisted for decades without necessarily leading to a crisis. Valuations of US technology stocks have surged due to investor excitement surrounding AI; however, we contend that this price increase is primarily driven by fundamental growth and robust balance sheets rather than irrational exuberance. In our opinion, the main risk lies in the possibility of disappointing earnings, which could jeopardize the sustainability of returns. Within the equity market, we aim to identify companies that demonstrate high gross margins, strong balance sheets, and resilient end markets.
Furthermore, in the realm of small and mid-cap stocks, we perceive potential opportunities among enablers, often referred to as the "picks and shovels" of the AI boom. Although AI capital expenditures have predominantly been financed internally thus far, the growing dependence on debt necessitates careful observation in 2026.