Investors are increasingly discussing the growing concern of a potential bubble forming within the major tech companies leading the artificial intelligence boom.

The “Magnificent Seven” — Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta, and Tesla — now represent nearly 45% of the Nasdaq 100 Index. According to Impax Asset Management Group’s CEO, the firm is strategically positioned to benefit if growing fears of an AI-fueled bubble led investors to pivot away from Big Tech.

Ian Simm, CEO of the $35 billion London-based firm focused on low-carbon and sustainable investment strategies, said the company is already “seeing signs that those benefits are beginning to materialize.”

Simm noted that growing investor discussions are centered on the potential bubble forming within tech giants leading the AI boom. Despite hundreds of billions being funneled into technologies with unproven long-term profitability, fear of missing out continues to drive valuations sky-high — with Nvidia alone speculated to hit a $5 trillion market cap.

Collectively, the “Magnificent Seven” — Nvidia, Microsoft, Apple, Alphabet, Amazon, Meta, and Tesla — now make up nearly 45% of the Nasdaq 100 Index.

“A large number of asset owners now are worried about the narrow markets and are seeking to diversify their exposure to equities through non-Mag 7 type portfolios,”

Simm said.

“The market can’t carry on being so narrow.”

Impax has faced a challenging few years, with underperforming low-carbon investments and the loss of key mandates. In late 2024, the firm lost a $6 billion portfolio contract with St. James’s Place Plc, which was subsequently awarded to Schroders Plc.

Additionally, Impax experienced fund outflows from mandates sub-managed for BNP Paribas Asset Management and significant redemptions from North American clients, as noted in its half-year report.

“There is a power deficit in much of the Western world, and particularly in the US, driven in part by the demand for new data centers,”

Simm said.

“And there is, of course, a lot of interest in energy efficiency, given that energy prices and power prices in particular have gone up very strongly.”