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T. Rowe Price flags heavy AI concentration in major US equity indexes

The Russell 1000 Growth Index is nearly 60% tied to AI infrastructure and hyperscale computing, while the S&P 600 Small Cap Index has no hyperscaler exposure and only 5% AI infrastructure exposure.

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ETF Trends reported that investors seeking to diversify away from artificial intelligence exposure may want to examine how concentrated AI exposure already is in US equity benchmarks, citing new research from T. Rowe Price.

According to the analysis, nearly 60% of the Russell 1000 Growth Index is tied to AI infrastructure and hyperscale computing companies, a figure derived from a ChatGPT and FactSet review of index holdings, T. Rowe Price capital markets strategist Timothy Murray said.

The research also points to pressure on hyperscaler free cash flow and notes that companies are funding more AI spending with debt, while showing AI exposure is lower in other segments such as US small-caps and developed international value stocks.

ETF Trends added that in US large-cap value, hyperscalers account for 12% of the Russell 1000 Value Index and AI infrastructure adds 7%, leaving nearly a fifth of the index tied to AI, and that the S&P 600 Small Cap Index has no hyperscaler exposure and 5% AI infrastructure exposure, with T. Rowe Price pointing investors to its actively managed TMSL fund.

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