AI, markets, concentration risk, and why discipline matters right now. By Lane Clark of TPP.

Right now, AI is driving market leadership, index concentration, capital expenditure, and valuations. The question serious investors are asking is this:

👉 Are we in a structural technological revolution… or the early stages of a valuation bubble?

History suggests it can be both.

Major technological shifts, railroads, electricity, the internet, created long-term transformation. But in the short run, capital typically over-allocates, valuations stretch, and markets become fragile to disappointment before fundamentals eventually catch up.

Today, we’re seeing several indicators that justify disciplined positioning:

1️⃣ Extreme index concentration
A small cluster of AI-linked mega-caps now represents close to 40% of the S&P 500. If AI momentum cools, even temporarily, the index is exposed, not just the individual names.

2️⃣ Infrastructure spending accelerating ahead of near-term demand
Hundreds of billions are being deployed into AI compute and data-centre capacity. That doesn’t invalidate the AI theme, but historically, build-outs overshoot in the short term, and expectations get repriced.

3️⃣ Valuations expanding faster than earnings in key areas
Today’s leaders do have revenues and profitability, but whenever multiples out-run fundamentals, markets become sensitive to shocks and macro shifts.

This doesn’t imply an imminent crash, but it does mean this is a probability-driven environment, not a momentum-chasing one.

And that’s why, just as we were toward the back end of last year, many of our strategies are currently under-exposed and largely FLAT / market-neutral.

Not bearish.
Not pessimistic.
Just disciplined and data-driven.

We only deploy capital when risk-reward becomes asymmetric in our favour, the same approach that helped our averge strategy achieve ~31% average returns in 2025, even while we avoided chasing stretched markets.

TPP runs four core tactics, and only one relies on trending markets. The others are engineered to:

• Control risk when valuations stretch
• Exploit volatility and dislocations
• Preserve capital in late-cycle conditions
• Strike decisively when probability turns in our favour

Right now, patience is positioning.

And when opportunity arrives, whether that’s today, next week, or next month, we’ll move quickly and deliberately.

🎯 If you want a second opinion on your portfolio

If your current portfolio is heavily exposed to AI-driven market concentration, or you’re unsure how it would behave if sentiment turns, let’s review it together.

👉 Schedule a FREE portfolio consultation call here

We’ll walk through your exposures, risk profile, and opportunities to position more intelligently for 2026.

Here is to blitzing benchmarks in 2026......

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