AI Mania Fuels Markets, but Concentration Risks Are Rising

In his latest market update, AXA IM’s Chris Iggo weighs booming equity momentum against mounting structural vulnerabilities.

• Equity markets are powered by three macro tailwinds: a massive wealth effect from tech-led gains, easy monetary conditions supporting credit growth, and loose fiscal policy focused on defense and technology.

• The AI-driven rally is highly concentrated: a handful of mega-cap stocks account for a disproportionate share of U.S. equity gains, amplifying valuation risk and market fragility.

• While credit conditions remain supportive, tight spreads and leveraged private credit signal late-cycle risk—raising questions about how long momentum can override fundamentals.

Could this be another multi-year melt-up—or the last stretch before a correction? The full report explores scenarios and portfolio implications