AI Mega‑Cap Rally Spurs Selective ETF Demand

Markets are near record highs, with gains concentrated in a handful of AI‑fueled mega‑cap growth stocks (the “Ten Titans” now account for roughly 39% of the S&P 500) even as small‑cap inflows have helped the Russell 2000 rebound. That concentration has pushed the index’s forward P/E above long‑run averages, raising valuation concerns. Investors are responding by favoring defensive and selective passive strategies — dividend, consumer‑staples and premium‑income ETFs — and selective small‑cap funds such as IJR that screen out underperformers. Company fundamentals are mixed: some AI‑linked names like DoubleVerify and Spotify show durable monetization and margin tailwinds, while independent analyses (StockStory/Yahoo Finance) flag weakening revenue, margins or cash profiles at a number of firms including Biogen, PagerDuty and Shutterstock. The research highlights a few selective opportunities such as Qualcomm and Limbach but cautions that high price targets, profitability or a net‑cash balance sheet do not guarantee sustainable outperformance; investors should prioritize earnings, revenue and cash‑flow trends before allocating capital.