Top Analyst Warns US Tech Stock Concentration Highest Since 2000 Bubble

Craig Johnson, Chief Market Technician at Piper Sandler, warned self-directed investors about the growing risks in US tech stocks, noting that sector concentration has reached its highest level since the dot-com bubble. He made the remarks during his appearance on CNBC's Morning Call Sheet, introducing Piper Sandler's report "The Bull Market That Few Trust."

Key Warning

Johnson stated that the technology sector now accounts for 41% of investable assets in the US, a level not seen since the 2000 bubble burst. He added that semiconductor stocks make up half of that sector, reflecting extreme concentration in a handful of names like Microsoft (MSFT) and Apple (AAPL).

Analyst's Rationale

Johnson believes this excessive concentration poses a risk to investors riding the AI trade, as any downturn in the sector could lead to significant losses. He noted that the current market lacks diversification, increasing potential volatility.

Broader Context

The warnings come amid strong performance in tech stocks driven by AI demand. However, other analysts argue that valuations are stretched and may not reflect fundamentals. Neither Microsoft nor Apple commented immediately.

What This Means for Investors

Investors should exercise caution and diversify their portfolios, especially as sector concentration approaches historically extreme levels. This is not a buy or sell recommendation but a call to reassess risk.