BofA Warns S&P 500 Concentration Risk Intensifies as Seven Tech Giants Dominate Gains

Bank of America equity strategist Savita Subramanian warned on June 1, 2026 that the S&P 500’s record highs mask increasing concentration risk, urging investors to favor individual stocks over the index. The so-called Magnificent Seven accounted for approximately 54% of the benchmark’s advance in the third quarter of 2025, despite 18 of 20 valuation indicators signaling overbought conditions. Subramanian cautioned that millions of 401(k) holders are unknowingly overweight a narrow group of AI giants, and a correction would be difficult for the broader market to offset. She maintained BofA’s year-end 2026 S&P 500 target at 7,100—well below the index’s late-May close above 7,520—implying a potential decline of about 6%. To mitigate risk, Subramanian recommended rotating into undervalued defensive sectors such as healthcare, real estate, and consumer staples.