Australian investors pour into US S&P 500 funds, lured by tech-driven gains, but rising AI risks threaten market stability.

Strong returns—more than 78% in just three years—driven by a few tech giants are drawing more and more Australian investors to US S&P 500 index funds. The Magnificent Seven and a few other leading companies now make up almost half of the index's value, which is higher than it was during the dot-com era. These businesses, which rely on debt and circular investments with pre-revenue startups like OpenAI, which anticipates no profits until 2030, are spending hundreds of billions on AI. Analysts caution that the market is at serious risk if AI investments don't pay off, which could result in a severe decline, since almost all tech profits are reinvested in AI and record borrowing for data centers.