Anthony Saglimbene, Chief Market Strategist – Ameriprise Financial
9/15/2025
The outperformance of Big Tech stocks has captivated investors in recent years as bullish attitudes about the promise of artificial intelligence (AI) have dominated the market narrative. This group of companies, which includes influential firms in the technology and communication services sectors, has helped the market reach all-time highs on the hope that AI adoption will lead to greater productivity gains and higher margins across industries over time.
That said, Big Tech carries elevated valuations and high investor expectations at the moment, along with a large concentration of exposure across major U.S. stock averages. In our view, this can present challenges for investors looking to maintain a well-diversified portfolio. As such, investors may want to take steps to mitigate overexposure and consider how sectors and asset classes beyond Big Tech equities may fit into their investment strategy.
Here are three “forgotten” investment opportunities that investors may want to revisit:
1. Make room for U.S. sectors outside of technology
Should Big Tech see unexpected near-term headwinds, the following U.S.-based sectors may help mitigate risk, provide diversification benefits and offer dividend opportunities for stock investors
- Financial services: A slowing economy, despite concerns about tariffs potentially raising goods-based inflation, should lead to a more dovish Federal Reserve. We believe the financial services sector would benefit from a modest reduction in short-term interest rates through year-end, particularly if longer-term rates remain anchored. This could help increase loan activity on the margin. In addition, increased capital markets activity — including across initial public offerings, merger and acquisitions, and business investment — along with a more favorable regulatory environment, could provide tailwinds to profit growth.
- Industrials: This sector could benefit from reshoring activity and AI-related/semiconductor infrastructure investment. While tariff exposure and economic sensitivity are risks for the sector, industrial firms have their own secular tailwinds across aerospace and defense, as well as growth opportunities in AI-driven manufacturing automation.
- Utilities: If interest rates move lower, utilities can offer a defensive hedge within sector allocations and help mitigate pressures. An increase in structural demand for electricity coming from AI infrastructure needs, onshoring activity and electric vehicles could also increase capital investment, which could boost profits over time.
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2. International stocks can help reduce overexposure to the U.S. and Big Tech
The information technology and communication services sectors account for over 40% of the S&P 500 Index by market-cap weight. Most U.S. broad-based large-cap or multi-cap mutual funds and exchange-traded funds (ETFs) have a heavy concentration of Big Tech stocks, which investors may not fully appreciate.
To help mitigate this concentration while also maintaining a healthy exposure to U.S. and Big Tech opportunities, investors might consider allocating to broadly diversified international strategies. Such international strategies provide meaningful exposure to cyclical areas outside of tech, including financials and industrials.
Developed market strategies, in particular, invest in well-established global companies across Europe and Asia. This allows investors to capture a larger portion of well-run and profitable international companies with more attractive valuations compared with U.S. and Big Tech stocks. For instance, the S&P 500’s price-to-earnings ratio based on the last 12 months of profits stands at an expensive 27x versus the 16.5x multiple of the MSCI All-Country ex-U.S. Index.
3. Don’t forget about the parts of the portfolio that aren’t equities
Should the Fed cut rates more aggressively than expected, today’s fixed income yields offer investors an attractive opportunity to move their cash holdings into modestly longer-duration bonds or fixed income strategies to help lock in higher rates.
For instance, high-quality investment-grade corporates and U.S. government bonds offer competitive yields that are often higher than money market funds and can extend those yields for years rather than months, depending on the investment type and strategy.
In addition, alternative strategies and real assets (including gold) can provide diversification and hedging, benefits that may be underappreciated with equity markets tracing all-time highs. Alternative strategies that help reduce equity and fixed income volatility — including equity hedged and long-short strategies, as well as small allocations to gold and diversified commodities — can help balance a portfolio should economic and market conditions evolve less favorably than we expect.
Bottom line
Investor enthusiasm for AI continues to fuel demand for Big Tech stocks and, in our view, there are more opportunities ahead for this subset of companies. However, opportunities outside of technology shouldn’t be ignored — particularly investment strategies that can offer diversification benefits.
We believe a prudent, well-diversified investment approach makes as much sense today as it did during the April lows, particularly as equity valuations in Big Tech are once again stretched. Connect with your Ameriprise financial advisor if you’d like to review your portfolio’s overall exposure to Big Tech and explore the investment opportunities we outlined in this article.