He Thinks His $200,000 S&P 500 401(k) Spreads His AI Risk. Two Alphabet Share Classes Put $10,380 in One Company. A 20% Drop Could Cost Him $2,076
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Consider a hypothetical 58-year-old with $200,000 of his 401(k) in an S&P 500 index fund. He figures every company is a thin piece of his savings and that no single AI stock can do much damage. The October 22 holdings that State Street published for the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) show something he missed: Alphabet (NASDAQ:GOOGL | GOOGL Price Prediction) is listed twice.
Why Alphabet Holds Two Seats in Your Index Fund
Alphabet has two share classes that trade publicly. Class A shares (GOOGL) carry voting rights. Alphabet Class C (NASDAQ:GOOG) has none. Class B is held by insiders and does not trade publicly. The S&P 500 weights stocks by market value, and it gives each public class its own position.
The October 22 report put Class A at 2.88% of the fund and Class C at 2.31%. Together, that’s 5.19% riding on one management team, one balance sheet and one capital spending plan.
This was already true earlier in the year. SPY’s March fact sheet listed the two classes at 3% and 2%. Because the classes appear on separate lines of a holdings screen, the combined stake is easy to miss.
A 20% Drop in One Stock Takes $2,076 From His Account
At a combined 5.19% weight, $10,380 of his $200,000 is tied to Alphabet.
Say both share classes fall 20% and every other holding stays flat. His account would lose about $2,076, or roughly 1% of his balance, because of one company.
Alphabet has already come close to that kind of drop. Its Class A shares fell from about $353 on October 12 to $299 on November 12, a slide of roughly 15% in one month. The stock’s 52-week high was nearly $409.
An equal-weight fund produces a very different number. In the July 31 filing for the Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP), the two Alphabet classes together made up about 0.19% of assets.
On $200,000, that works out to roughly $388, about 27 times smaller than his current exposure.
Alphabet’s AI Spending Now Affects His Retirement Balance
Alphabet’s third-quarter results show why this exposure carries more risk than it used to. Google Cloud revenue grew 103% to $31 billion.
Capital spending for the quarter reached $51 billion, up 114%, which left free cash flow at negative $9 billion.
Management credits the spending for the growth. CEO Sundar Pichai said Google Cloud revenue jumped 103% as demand for AI infrastructure surged. Still, Alphabet missed Wall Street’s revenue estimates. Earnings came to $2.12 a share, weighed down by an $8.7 billion loss on equity investments.
Alphabet is hardly alone. Bloomberg Intelligence estimates that U.S. hyperscalers will spend roughly $857 billion on capital projects in 2026. Alphabet’s links to AI valuations also go beyond its own data centers: Reuters reports that Amazon (NASDAQ:AMZN) and Google stand to gain a large windfall from an Anthropic IPO. The AI build-out may well pay off. The issue for a saver near retirement is position size. At 58, a sharp drop just before withdrawals begin does more damage than the same drop at 35.
Three Moves to Make Before Your Next Rebalance
- Add every share class together. Pull the holdings for each fund in your 401(k), IRAs and brokerage accounts, then add the GOOGL and GOOG lines for each fund. Weight each fund’s figure by the dollars you hold in it. Set a personal ceiling for any one company. Limiting it at 5% of your total portfolio is one example.
- Rebalance inside the 401(k), where trades are free of tax. Moving money between funds in a 401(k) does not trigger capital gains, so this account is the cheapest place to cut concentration. If your plan offers an equal-weight, mid-cap or value fund, moving part of the S&P 500 allocation there reduces your Alphabet exposure without a tax bill.
- Check for overlap across your funds. A large-cap growth fund or a technology sector fund also holds both Alphabet classes. Add those positions to your S&P 500 exposure before deciding how much AI risk you already have.
Moral of the story? Two ticker symbols still mean one business. Treat them as one holding when you add up your exposure.
Contact [email protected] for any questions or corrections.
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.
