Goldman Sachs Sees Investors De-Risking From AI Stocks. At 63, She Finds the Same Crowded Trade Inside Her $900,000 401(k)
Goldman Sachs just flagged the largest tech sell-off ever recorded in its prime brokerage book, and a 63-year-old with three 401(k) funds may be carrying far more of that risk than she realizes.
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Picture a 63-year-old with $900,000 in her 401(k), divided among an S&P 500 index fund, a growth fund and a target-date fund. She figures three funds mean three different sources of risk. Her situation is hypothetical, but the assumption is familiar.
Goldman Sachs just gave her a reason to check. On the firm’s The Markets podcast, recorded Oct. 22 and posted Oct. 23, Rich Privorotsky, head of European Equities Trading in Goldman’s FICC and Equities division, said investors were de-risking out of a crowded trade in AI, semiconductor and hyperscaler stocks. He cited rising capital costs, power constraints and more competition. He also said the prior week saw the largest tech selling ever recorded in Goldman’s prime brokerage book.
The pressure is showing up in stock prices. Invesco QQQ Trust (NASDAQ:QQQ) is down about 4% over the past month and still up about 16% this year. Privorotsky called hyperscaler earnings the key test, and those reports land alongside a Fed decision in a crucial two-week stretch for stocks.
Three Funds Sharing One Set of Top Holdings
Index funds weight companies by market value, so the largest companies take the largest slices. Vanguard S&P 500 ETF (NYSEARCA:VOO) had 38% of its assets in information technology at midyear.
Growth funds push the tilt further. Using QQQ as a stand-in, NVIDIA (NASDAQ:NVDA | NVDA Price Prediction) made up about 8% of the fund as of Oct. 16. Apple (NASDAQ:AAPL) came in near 8% and Microsoft (NASDAQ:MSFT) near 6%. Other chipmakers appeared among its top holdings, too.
Many target-date funds hold broad U.S. stock funds, putting those same names back in the mix. Vanguard’s How America Saves 2026 report found that 22% of its target-date investors held one target-date fund alongside other investments in 2025. That’s one way the overlap happens.
For someone nearing retirement, the number of funds matters less than how much of the account depends on the same stocks.
What a 25% Drop in Her AI Holdings Would Cost
Suppose her combined exposure to AI-linked companies across the three funds adds up to 40% of her balance, or $360,000. That’s an illustration. Her actual exposure could run higher or lower.
If that piece falls 25% and the rest of the account remains flat, she loses about $90,000. Her balance drops to $810,000. One theme she believed was spread across three funds would cost her 10% of her whole retirement account.
Her age raises the stakes. At 63, she is likely a few years from drawing on this money. Every share she has to sell after a drop turns a paper loss into a permanent one, and that shrinks the base she needs to keep compounding through her 70s and 80s. Riding a mania like this one carries risk, which is why you plan the exit; it is also the whole subject of our free bubble survivor’s handbook.
Map the Overlap, Then Rebalance on Your Own Schedule
- Map every fund. Pull the latest holdings and sector weights. Multiply each stock’s share of a fund by the dollars you have invested in it, then add up NVIDIA, Apple, Microsoft and the chipmakers across your funds. With a target-date fund, check its underlying stock funds, too, because the top-level holdings may show only fund names.
- Line the exposure up against your cash needs. Estimate what you will withdraw over the next three to five years, before Social Security or other income fills the gap. Keeping some near-term spending money in a stable-value or short-term bond fund, if your plan offers one, can reduce the chance of having to sell stocks during a tech pullback.
- Rebalance to a target you choose ahead of time. Pick your stock and bond split and a cap on any single theme before the next headline hits. Trades inside a 401(k) generally don’t trigger an immediate capital gains tax bill, though plan fees or trading restrictions may apply. Many plans also offer automatic rebalancing.
Once she maps the holdings, that hidden $360,000 exposure becomes a risk she can choose to keep or offset. The next round of hyperscaler earnings may still move her balance, but at least she knows what’s at stake.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
