Is The Market Now Just The Mag-7? Investors Call Tech Concentration A Major Risk

Author: Surbhi Jain | November 22, 2025 09:31am

The AAII Sentiment Survey just confirmed what every investor scrolling X already suspected: a growing number of retail investors think the stock market has shrunk from 500 companies to… roughly seven. The "Mag-7" — Apple Inc (NASDAQ:AAPL), Amazon.com Inc (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG), Meta Platforms Inc (NASDAQ:META), Microsoft Corp (NASDAQ:MSFT), Nvidia Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA)— continue to dominate returns, headlines, and portfolio anxiety. And now, investors are saying the quiet part out loud: this concentration is becoming a major risk.

• Track the S&P 500 tracking SPY here.

More than a third of AAII respondents labeled mega-cap tech dominance a "major concern," and another third called it "somewhat concerning but manageable." Translation? Investors aren't panicking, but they're definitely tightening their seatbelts.

Read Also: Magnificent Seven Will Become Low-Profit Tech Utilities

Sentiment Improves, But It's Not Exactly Confidence

Even with megacap jitters, sentiment overall improved this week. Bearishness finally eased off its near-year-long perch while bullishness and neutrality both inched higher. But don't mistake that for enthusiasm — bullish sentiment remains stuck below its long-term average, and neutral sentiment is still deeply depressed versus history.

That profile — slightly less fear, not much more conviction — fits the moment perfectly. Yes, pessimism is pulling back. But no, Main Street isn't suddenly excited about valuations perched on the shoulders of seven giants.

Investors looking for a sentiment-driven mean reversion typically start scanning broad ETFs like the SPDR S&P 500 (NYSE:SPY) and the Vanguard S&P 500 ETF (NYSE:VOO), or the equal-weight the Invesco S&P 500 Equal Weighted ETF (NYSE:RSP), which historically outperforms during transitions from peak fear to cautious optimism.

When Seven Stocks Move The Market, ETF Investors Start Looking For Plan B

With investors openly questioning whether the S&P 500 has effectively become the "S&P 7," ETF flows are starting to reveal a quiet rotation. Funds like the Invesco S&P 500 Equal Weighted ETF (NYSE:RSP) (equal-weight S&P 500) look appealing for investors who want to de-risk concentration. Small-cap and mid-cap ETFs like the iShares Russell 2000 ETF (NYSE:IWM), the iShares Core S&P Small-Cap ETF (NYSE:IJR), and the SPDR S&P MidCap 400 ETF (NYSE:MDY) become natural escape hatches for those betting the rest of the market eventually wakes up.

Meanwhile, for those who believe megacap dominance is simply the reward for unmatched earnings power, sticking with the Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) or the Technology Select Sector SPDR Fund (NYSE:XLK) remain the conviction trade.

Read Also: Billionaire Ray Dalio Says Ride The Bubble Until It Bursts

Concentration Is A Risk — But Also An Opportunity

The AAII survey paints a picture of a market uneasy with its own imbalance. When seven stocks steer the index, sentiment becomes hypersensitive — and rotation moments become profitable.

For investors, the message is simple: This isn't about fleeing tech. It's about recognizing that when the market narrows, opportunity widens elsewhere.

Read Next:

• VIX Surges 50% In November: History Shows Patient Investor Win Big After Panic

Posted In: AAPL AMZN GOOG GOOGL IJR IWM MDY META MSFT NVDA QQQ RSP SCHD SPY TSLA VOO VTV XLK