The global market, long driven by large technology stocks, is showing signs of fatigue.
On August 23, a commentary article in the Financial Times pointed out that this week's sell-off in tech stocks is not only a warning about their high valuations but also a dangerous signal: risks may have seeped from the public markets into the more opaque private equity markets that provide massive funding for the AI boom.
This &#34;top-heavy&#34; market structure dominated by a few tech giants is facing dual challenges from the AI narrative itself and the excessive concentration in the private equity market. Once the engines of tech stocks, especially AI concept stocks, stall, the stability of the entire market will face severe challenges. As the article states:
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So far, what is good for tech stocks and AI is good for the global stock market. But if tech stocks and AI really encounter major problems... well, the consequences are self-evident.
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<h2>Visible Imbalance: Tech Giants Struggling Alone</h2>
This year, the impressive performance of the U.S. and even global stock markets has been almost entirely &#34;lifted&#34; by a few tech giants.
Take chip giant NVIDIA as an example, whose market capitalization has reached $4.3 trillion, equivalent to 1.5 times the total market capitalization of the entire UK FTSE 100 Index. Data shows that the largest 10 companies in the U.S. account for about 40% of the weight of the S&amp;P 500 Index and contributed one-third of the revenue growth of the index over the past year.
This extreme concentration has led to severe market divergence: the S&amp;P 500 Index has risen 9.5% this year, while the Russell 2000 Index, which tracks small-cap stocks, has only risen 4.2%.
<h2>AI Myth Fading: From &#34;Irrational Exuberance&#34; to &#34;Zero Returns&#34;</h2>
Investor concerns are not unfounded; cracks are appearing in the AI narrative itself.
On one hand, even the leaders in the AI field are beginning to speak cautiously. Sam Altman, CEO of OpenAI, recently stated at an event that the market's enthusiasm for AI contains elements of &#34;bubble&#34; and acknowledged the existence of a period of &#34;irrational exuberance.&#34; He candidly remarked, &#34;I think some investors are likely to lose a lot of money.&#34;
On the other hand, the commercial implementation of AI is far from expectations. A report released by the Massachusetts Institute of Technology (MIT) in July showed that about 95% of organizations have achieved &#34;zero returns&#34; on AI investments, with only 5% of pilot projects creating actual value.
This data undoubtedly douses cold water on investors hoping for &#34;AI magic&#34; to turn stone into gold.
<h2>Invisible Risks: Is the Private Equity Market a &#34;Powder Keg&#34;?</h2>
The article further warns that risks are not limited to publicly traded stocks; a more concerning trend is that the massive funding relied upon by the AI boom is increasingly coming from opaque private equity markets.
The development of AI requires large data centers as support, and their construction requires huge funding. It is estimated that global spending on AI infrastructure will approach $3 trillion over the next three years. Tech giants like Amazon and Alphabet may only be able to bear about half of these costs
The remaining huge funding gap will mainly be filled by private equity, private credit, and venture capital.
UBS pointed out in a report this month that private credit has become a &#34;key engine&#34; driving AI growth. According to the bank's data, the risk exposure of the private debt market to AI surged by $100 billion in the year ending early 2025, reaching approximately $450 billion, far exceeding the funds from the public credit market.
The influx of funds has made managers in the private market increasingly vigilant. Josh Shipley, head of PGIM Private Capital in Europe, stated that investments in the AI sector are &#34;a topic discussed at every executive meeting.&#34; He believes that the current scale is not sufficient to trigger &#34;systemic shocks,&#34; but the risks cannot be ignored.
UBS analysts warned that as retail and pension fund capital continues to flow in, the private market is not only providing growth momentum for AI but is also &#34;sowing the seeds of overheating risk.&#34;
The concentration of risk is no longer just an issue for the public equity market; it has spread throughout the private market. If these specialized lending institutions begin to fail and impact the broader financial system, then Sam Altman's description of &#34;that sucks&#34; may be an understatement

OpenAI

NVDA

The pullback of technology stocks is sounding the alarm for the market. Risks are quietly spreading from the "top-heavy" public market supported by a few giants to the private credit sector that provides substantial funding for AI infrastructure. Once leading technology stocks lose momentum, the stability of the entire market will face severe challenges

- The global market, driven by large tech stocks, is showing signs of fatigue, with a recent sell-off raising concerns about high valuations and risks spreading to the private equity market.  
- Major tech companies dominate the market, with the top 10 U.S. firms accounting for about 40% of the S&P 500's weight, leading to significant market disparities.  
- Additionally, the private market's increasing role in funding AI development poses hidden risks, as a surge in private debt exposure to AI could threaten the broader financial system if these investments falter.

Tech stocks issue a warning: The AI narrative begins to waver, and risks are spreading to "invisible" corners