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Alphabet, Inc’s (NASDAQ:GOOGL) shares plunged nearly 13% on Thursday, wiping out about $482 billion in market value. It was the second-largest one-day loss ever recorded for a U.S.-listed company, behind Nvidia’s $593 billion wipeout in January 2025.

The selloff followed Alphabet’s third-quarter results, which raised concerns about whether its massive artificial intelligence investments are generating sufficient returns.

The concerns extend beyond Alphabet. Amazon.com, Inc (NASDAQ:AMZN) reported 39% growth in AWS revenue, but its trailing 12-month free cash flow fell to a record outflow of more than $42 billion, reflecting increased infrastructure spending.

For ETF investors, the question is whether growing exposure to mega-cap technology companies could amplify losses as investors reassess the returns on AI investments.

QQQ and XLC face concentration risks

The Invesco QQQ Trust (NASDAQ:QQQ) is particularly exposed to this trend. Nvidia Corp (NASDAQ:NVDA), Microsoft Corp (NASDAQ:MSFT), Alphabet and Amazon are among its largest holdings, making it vulnerable to a broader reassessment of AI valuations and spending.

The Communication Services Select Sector SPDR Fund (NYSE:XLC) faces even greater direct Alphabet exposure. Its two share classes together account for a substantial portion of the portfolio, alongside Meta Platforms (NASDAQ:META).

Thursday’s trading highlighted the impact of these exposures. XLC fell 1.87%, while the Technology Select Sector SPDR Fund (NYSE:XLK) declined 1.18%. The broader SPDR S&P 500 ETF Trust (NYSE:SPY) lost 0.37%.

Could Equal-Weight ETFs Offer a Buffer?

The Invesco S&P 500 Equal Weight ETF (NYSE:RSP) gained 1.2% on Thursday, even as SPY declined 0.37%.

Unlike traditional market-cap-weighted funds, RSP assigns approximately equal weights to S&P 500 constituents, limiting the influence of individual mega-cap stocks on portfolio performance.

Another alternative is the Invesco NASDAQ 100 Equal Weighted ETF (NASDAQ:QQQE), which provides exposure to Nasdaq-100 companies without allowing the largest constituents to dominate.

However, equal weighting is not necessarily safer. It can increase exposure to smaller, more volatile companies and underperform when mega-cap stocks lead the market.

Market Volatility Becomes Difficult to Ignore

U.S.-listed stocks suffered 18 sessions in 2026 when at least $200 billion in market value was erased—more than the 13 recorded in all of 2025 and more than any year before 2022.

As AI infrastructure spending rises, investors may increasingly distinguish between companies translating AI investments into revenue and those struggling to generate sufficient cash flow.

For ETF investors, portfolio concentration could matter as much as choosing which sector to own.

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