ST. LOUIS, Dec. 17, 2025 (GLOBE NEWSWIRE) -- The one question weighing heavily on investors’ minds as we close out 2025 is whether we are experiencing an AI-driven bubble in U.S. stock markets. In its recently published Prism: 2026 First Half Outlook, &Partners argues that rather than debating whether current equity values are overly inflated, investors should focus on how to invest prudently when valuations are lofty and benchmarks are dominated by a small group of AI-leveraged companies.
According to the report, investors who track major indexes may unknowingly have significant exposure to a single economic theme — AI. While the transformative potential of AI is clear, how to value it is not. Further calibrating its impact on the wider economy is even more challenging, which means that small changes in projected earnings or shifts in capital spending assumptions could lead to a substantial re-rating in markets.
“AI innovation is real and transformative,” the &Partners Investment Team noted. “But successful investing isn’t about betting everything on one outcome. It’s about building portfolios that can endure a wide range of scenarios.”
Prism outlines three strategies designed to enhance portfolio resilience:
- Assess hidden concentration risk to AI: Investors may be more exposed to AI than they realize through index-tracking strategies. For example, the Magnificent Seven — which have all staked their futures on AI — now make up more than one-third of the S&P 500. Simple measures such as the percentage of AI-related stocks, the technology share of the overall portfolio, or the size of the U.S. equity allocation relative to the total equity allocation can reveal how much AI exposure a portfolio holds.
- Consider diversification to reduce concentrated positions: Diversifying beyond U.S. growth stocks allows investors to maintain equity exposure without doubling down on already large bets. And it can result in higher risk-adjusted returns. For example, over the five years through October 2025, the MSCI EAFE Enhanced Value Index (+19.1% annualized) outperformed the S&P 500 (+17.6% annualized).
- Manage the tax impact of portfolio changes: Smart strategies can help minimize taxes when reallocating assets. Examples include intelligent tax location approaches, completion portfolios funded by new money, and active tax-loss harvesting strategies.
No one can say with certainty whether U.S. stocks are in a bubble as evidenced by persuasive voices among both AI bears — who draw parallels to previous financial bubbles — and AI bulls, who point to leading AI companies’ robust businesses and transformative technologies. Fortunately, according to &Partners, whether the AI rally is sustainable isn’t the most important question. The most pressing issue is how investors should position their portfolios when a bubble might exist.
For additional insights and detailed analysis on investing when bubbles may be on the horizon, download the full issue, Prism: 2026 First Half Outlook: Investing amid AI exuberance.
Published twice a year, Prism shares the &Partners Investment Team’s perspectives on market conditions and portfolio strategy.
About &Partners
&Partners is a rapidly growing, advisor-owned wealth management firm built for advisors seeking greater ownership, flexibility, and community. Founded by former Wells Fargo leaders and based in Nashville, Tennessee, and St. Louis, Missouri, the firm offers a hybrid model that combines competitive payouts with equity participation, institutional support, and access to a collaborative peer network. Having quickly grown to 105 practices with approximately $50.5 billion in prehire assets as of November 27, 2025, &Partners provides a platform where advisors can build lasting businesses on their terms without sacrificing service, scale, or culture. Clearing and custody services are provided by National Financial Services LLC, a Fidelity company. Our mission is to change financial lives for the better by providing highly personalized advice that seeks to avoid missteps and optimize opportunities. To learn more, visit andpartners.com.
&Partners is the enterprise trade/marketing name for Ampersand Partners LLC, a Delaware limited liability company, and its subsidiary, &Partners, LLC, a Tennessee limited liability company registered with the U.S. Securities and Exchange Commission as a broker-dealer and investment adviser. Securities and investment advisory services offered through &Partners, LLC, member FINRA and SIPC.
Media contacts: Kate Ennis, ennis@daipartnerspr.com, (301) 580-6726 and Trevor Wade, trevor.wade@andpartners.com, (415) 515-4560
