Your 401(k) keeps buying more of the AI giants, and nobody asked you

What changed

If you have a 401(k) and never picked your investments, you already own the AI giants. You did not choose them. The default chose them for you. More than 80% of 401(k)s start savers in a target-date index fund, a ready-made mix built around the year you plan to retire, Fortune reported on September 28. Most of those funds buy stocks by size.

Buying by size sounds dull, and for a long time it made good sense. The fund buys every stock in the market, and more of the biggest ones. When a company grows, the fund automatically buys more of it, no matter how expensive it gets. The industry calls this market cap weighting. "Market cap weighting isn't a choice, it's not a methodology, it just is," said Jim Rowley, who runs indexing strategy at Vanguard.

What changed is how big the biggest have become. Seven tech giants, a group Wall Street calls the Magnificent Seven, now make up about 30% of the S&P 500, Wall Street's most widely followed stock index. That is nearly a third of it, by the estimate of the research firm Yardeni Research, as Fortune reported. "It's concentration and size, all packed together, even more than there was during the dotcom bubble," said Valentin Haddad, a finance professor at UCLA Anderson.

Why it matters

More than half of American families had a retirement account in 2022, the Federal Reserve found. That counts 401(k)s and individual retirement accounts, or IRAs. For a 401(k), the money comes straight out of a paycheck. When nobody chooses, the default decides where it goes.

Now the surprise. Some of the giants' profit exists only on paper. Amazon, the online retailer and one of the seven, has invested $13 billion in Anthropic, the AI company. Amazon's own report shows its profit for the first three months of 2026 was $30.3 billion. That profit included $16.8 billion in pre-tax gains from its Anthropic investments.

Those gains show up as profit because of a 2016 accounting rule. It lets a company count a rise in the value of a private stake toward its profit, before it sells anything. "That high valuation in the private markets is unrealized," said Hera Hyeonseo Lee, a sociology researcher at Binghamton University who studies how AI is financed. An index fund never reads that fine print. It buys by size.

Here is what one giant can mean for your account. Haddad points to Tesla, the electric-car maker, which he said "can even be something like 3% to 4% of some portfolios, in their 401(k)." He said he was not predicting it, but a scenario where Tesla goes bust is "not that hard to imagine." "Whether they know it or not," he said, "Tesla is a big chunk of lots of people's portfolios."

The twist is in who holds these accounts. Fortune notes that the workers most likely to have a 401(k) hold office jobs that AI could threaten. "I worry that workers are using their deferred wages to finance the AI designed to eliminate their jobs," Lee said.

What to watch

The next giants are getting into index funds faster. In March, Nasdaq adopted a "fast entry" rule for the Nasdaq-100, its index of 100 of the largest companies listed on its exchange. A giant new stock can now join after 15 trading days, instead of waiting at least three months. The rule took effect on May 1.

SpaceX, the aerospace and satellite company, was one of the first to use it. It went public on June 12 and joined the Nasdaq-100 on July 7. More than $800 billion tracks that index, so funds following it had to buy. S&P Global, which runs the S&P 500, went the other way. It kept its rule that a company must be profitable to join, and SpaceX, which lost $4.94 billion in 2025, stays out for now.

Anthropic is heading toward a stock market listing of its own, and Fortune expects rules like Nasdaq's to come into play when it does. You cannot change those rules. You can know what your default holds. Rowley's list of what a saver controls is short: "my time horizon, risk tolerance, and asset allocation," and funds "on the lower end of the cost spectrum."

That means how long until you need the money, and how big a drop you can live with. It also means how you divide your savings between stocks and bonds, and how little you pay in fees. Many plans also offer equal-weight index funds, which give every company the same share.

The default still does what it always did. It buys by size. The difference now is that size points at a few giants, and nobody asked you.