Many of the AI stocks in a 401(k) arrive through a target-date fund nobody picked, since target-date funds are 98% of the default investments in the plans Vanguard runs. By the SEC filing for June 30, 2026, about $56,000 of every $500,000 in Vanguard’s Target Retirement 2030 Fund sits in the ten largest US stocks, and most of those are companies building artificial intelligence or selling the chips it runs on. Nobody at Vanguard and nobody in the plan ever placed that bet.
What a 2030 retirement fund holds
The 2030 fund owns other Vanguard funds. At June 30 it held 35.26% of its $114 billion in the Total Stock Market Index Fund, and that fund’s ten largest positions made up 32.03% of it, so multiplying the two filings gives the table below.
| Holding, June 30, 2026 | Of every $500,000 in the 2030 fund |
|---|---|
| Nvidia | $11,205 |
| Apple | $10,352 |
| Alphabet, both share classes | $9,125 |
| Microsoft | $6,750 |
| Amazon | $5,621 |
| Broadcom | $4,357 |
| Micron | $3,171 |
| Meta | $3,013 |
| Tesla | $2,886 |
| Ten largest holdings together | $56,480 |
Alphabet appears twice, once per share class, so ten holdings make nine companies. The 2060 version of the fund, built for younger workers, puts about $87,000 of every $500,000 in the same ten, and the Investment Company Institute puts the average 2030 target-date fund at 33% in US stocks, so this one is typical.
How an index fund became an AI fund
An index fund buys every company in proportion to its stock market value, so when a handful of companies rise much faster than the rest, the fund ends up owning far more of them without anyone deciding to. In the plans Vanguard runs, target-date funds took 64% of new contributions in 2025, according to How America Saves 2026, and the ICI counts $10.8 trillion in 401(k) plans nationally as of June 30, 2026.
S&P Dow Jones Indices has published what the prices did. The ten largest companies in the S&P 500 went from 31% of the index in 2023 to almost 40% by mid-2025, which S&P DJI called “a level of concentration not seen since the mid-1960s.” On August 31, 2026 the top ten were still 37.8%, with the largest single stock at 8.1%. The Bank of England looked at the same market in October 2025 and found the top five alone “at close to 30%,” higher than at any point in the past 50 years.
The fair point on the other side is that these companies are very profitable, which is much of why they grew so large. Jerome Powell, then chair of the Fed, said in October 2025 that they “actually have earnings.” For a 30-year-old a few bad years for ten companies is something to sit through, but for someone who is 62 it is the balance they retire on.
Where the money goes
Microsoft, Alphabet, Amazon, Meta and Oracle are building the AI data centers. Their 10-K cash-flow statements show what each spent on buildings and equipment in its latest fiscal year, which counts all capital spending and not only AI.
| Company | Latest fiscal year | Year before |
|---|---|---|
| Microsoft, year to June 2026 | $115.95 billion | $64.55 billion |
| Alphabet, 2025 | $91.45 billion | $52.53 billion |
| Amazon, 2025 | $131.82 billion | $83.00 billion |
| Meta, 2025 | $69.69 billion | $37.26 billion |
| Oracle, year to May 2026 | $55.66 billion | $21.21 billion |
| All five | $464.57 billion | $258.55 billion |
Meta has told investors it expects capital spending of about $130 billion to $145 billion in 2026. Not all of it comes out of profits, since in June 2026 Alphabet sold $49.6 billion of new stock and said in its quarterly filing the money would go partly to “capital expenditures to scale AI infrastructure and global compute.”
The new Fed chair, Kevin Warsh, told reporters on July 29 that “the surge in high-tech capex has been remarkable.” In June he said AI “is filled with both a huge opportunity and with risks.”
What the people closest to it have said
Powell was asked about stock prices in January 2025. He said they were “elevated by… many metrics right now,” and that “a good part of that, of course, is this thing around tech and AI.” In August 2025 Sam Altman, who runs OpenAI, told a dinner of reporters, as The Verge reported, “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes.” Three months later Sundar Pichai, who runs Alphabet, told the BBC there are “elements of irrationality through a moment like this” and that “no company is going to be immune, including us.”
The Bank of England’s Financial Policy Committee wrote in October 2025 that “equity market valuations appear stretched, particularly for technology companies focused on Artificial Intelligence,” and that combined with rising concentration this “leaves equity markets particularly exposed.” In December it said US stock valuations were close to the most stretched since the dot-com era.
In November 2025 the market contacts the Fed surveys for its Financial Stability Report said a turn in sentiment toward AI could lead to a correction, and in May 2026 they named AI valuations and debt-funded capital spending among their risks. The Fed prints those as the respondents’ views, not its own.
At Jackson Hole in August, Warsh asked “how much of the surplus goes to owners of scarce assets,” and named the AI labs, chipmakers, energy producers and cloud providers, which is the question anyone holding these companies is waiting on. Powell’s answer on the data-center build-out, in October 2025, was shorter. “I don’t know how those investments will work out.”
What moves separately from the AI trade
The usual answer is to hold something whose price does not depend on how that spending turns out. Bonds were supposed to be that, and in 2022 they fell alongside stocks, which our piece on the Fed’s rate hike and the 401(k) goes through year by year.
Gold is the other place people look. We measured the correlation of monthly returns between the LBMA gold price and the S&P 500 over the 36 months to September 2026, and it came to 0.01, with minus 0.10 against the Nasdaq-100. That does not mean gold rises when stocks fall. It means the two have not tended to move together, so what happened to gold did not hinge on what happened to Nvidia.
Gold is also not a company, so there is no earnings report, no data center and no chief executive whose view on AI moves its price. Since 1997, section 408(m)(3) of the tax code has let an IRA hold qualifying gold coins and bullion, as long as a trustee, in practice the IRA custodian and its depository, holds the metal. The change came in Public Law 105-34, section 304.
How much should ride on one industry
Our view is that a fund putting about a third of its US stock money into ten holdings is less diversified than its name suggests, and that part of a retirement belongs in something whose price has not moved with those companies. For us, that is gold, held for what it does not depend on rather than for a forecast that it will beat anything.
You do not need to know whether AI ends up like the railroads or like the dot-com boom to decide you would rather not have your savings depend on which one it becomes. How much to hold outside it depends on your balance and how close you are to drawing on it.
See what a slice held outside the stock market would look like in dollars at your own balance, with no sign-up and no salesperson.
Run your own allocationIf you want to go further, our gold IRA guide covers how the account works, what it costs and the questions to ask a custodian first.
Chapters
- 00:00 What's inside a 2030 retirement fund
- 01:26 How an index fund became an AI fund
- 03:53 Where the money goes
- 07:15 What moves separately from the AI trade?
- 08:28 How much should ride on one industry?
Where every number came from
Every link below was checked on 29 September 2026, and each goes to the document the figure was read from.
- The 2030 fund’s split across its underlying funds is from its SEC Form N-PORT for June 30, 2026, and the ten largest stock holdings are from the Total Stock Market Index Fund’s N-PORT for the same date. The dollar table multiplies the two and is our calculation.
- Target-date shares of contributions and assets in Vanguard-run plans are from Vanguard, How America Saves 2026, figures 57, 58 and 73.
- The average 2030 target-date fund’s mix is from the ICI Quick Facts on Target Date Funds, and the $10.8 trillion in 401(k) plans is from the ICI Quarterly Retirement Market Data, second quarter 2026.
- Index concentration comes from S&P Dow Jones Indices, the S&P 500 index page as of August 31, 2026, the Indexology post of January 13, 2026 and Tim Edwards, In the shadows of giants.
- The Bank of England figures and quotes are from the Financial Policy Committee record, October 2025, and the Financial Stability Report, December 2025.
- Capital spending is purchases of property and equipment in each company’s 10-K, from Microsoft, Alphabet, Amazon, Meta and Oracle.
- The Alphabet stock sale and Meta’s 2026 guidance are from their 10-Q filings for the quarter ended June 30, 2026, Alphabet and Meta.
- Powell and Warsh are quoted from the Federal Reserve’s press conference transcripts of January 29, 2025, October 29, 2025, June 17, 2026 and July 29, 2026, and from Warsh’s Jackson Hole remarks, August 28, 2026.
- The survey findings and the Board’s valuation language are from the Federal Reserve’s Financial Stability Reports of November 2025 and May 2026, box 5.1 for the surveys.
- Altman is quoted as reported by The Verge on August 15, 2025, and Pichai as reported by BBC News on November 18, 2025.
- The correlations are our calculation from the LBMA gold PM price and the FRED series SP500 and NASDAQ100, using Pearson correlation of month-end returns.
- Gold in an IRA is governed by 26 U.S. Code 408(m), as amended by Public Law 105-34, section 304.
This page is general education, not investment, tax or legal advice. Dollar figures describe one named fund on one date, not your account.