Veteran investigative journalist Bethany McLean warns that S&P 500 index funds have become concentrated bets on the AI economy due to their heavy weighting toward hyperscalers. In a Motley Fool podcast, McLean said the free cash flow of the Magnificent Seven is quietly turning negative as they spend heavily on AI data centers and chips. She also highlighted circular financing within the AI ecosystem that makes it nearly impossible to see actual end-user demand. McLean advised investors to recognize that their index fund is no longer providing broad market diversification.
