\n A $2.5 trillion wipeout for the Nasdaq Composite this week is reminding even the smallest investors just how reliant we\u2019ve all become on the success of the artificial intelligence buildout.\n <\/p>\n
\n As AI stocks tumbled Thursday, the major indexes dropped sharply, with the Dow, S&P 500 and Nasdaq each posting their worst day in 19 months<\/a>. The Democrat sweep in the midterm elections is accelerating concerns that moratoriums and other public policy hurdles could slow the pace of AI data center construction.\n <\/p>\n \n The recent volatility is unnerving, but it reinforces the importance of diversification: Investing in a mix of stocks, bonds, commodities and other assets can help make sure a portfolio isn\u2019t too reliant on a few blockbuster stocks \u2014 and can help you weather rough times.\n <\/p>\n \n Many portfolios and 401(k)s became increasingly AI-heavy as tech companies\u2019 market values surged and grew to comprise larger portions of benchmark indexes like the S&P 500.\n <\/p>\n \n The recent tech-driven selloff \u201cis a wake-up call for investors who may have drifted away from a well-diversified portfolio,\u201d Arun Sundaram, senior vice president for investment strategy at CFRA Research, told CNN.\n <\/p>\n \n That wake-up call means it\u2019s time for investors to put in some work to ensure they are diversified.\n <\/p>\n \n Over the past four years, AI has become the dominant force in the stock market, boosting the share prices of technology companies, semiconductor chipmakers and other businesses involved in the data center buildout.\n <\/p>\n \n Chipmakers make up nearly one-fifth of the S&P 500\u2019s market value. The top 10 stocks in the index \u2014 nine of which are tech stocks \u2014 account for almost 40% of the index\u2019s market value. As tech stocks have soared in recent years, major indexes like the S&P 500 have become more concentrated, which can make it feel harder to diversify.\n <\/p>\n \n The AI boom sent the S&P 500 soaring 88% between November 2022 \u2014 when OpenAI unveiled ChatGPT for public use \u2014 and Thursday\u2019s rout, lifting the value of portfolios and 401(k)s. Since AI supercharged much of the index\u2019s gains, many portfolios are now heavily exposed to AI<\/a> and underprepared if there were ever a severe decline in stocks tied to the buildout.\n <\/p>\n \n Seeing a lot of red in your portfolio can be unsettling, but it\u2019s essential to remain calm and avoid selling in panic, portfolio managers said. It\u2019s important to be disciplined about how you take action.\n <\/p>\n \n There\u2019s no one-size-fits-all strategy for investing, and it largely depends on your age, time horizon and risk tolerance.\n <\/p>\n