OpenAI's $122 Billion Burn Rate Sparks Debate on AI Spending Excesses

The article warns that OpenAI’s reported $122 billion funding — a projected three‑year “burn” on compute — and a broader $635 billion AI capex cycle concentrated in a handful of mega‑cap tech firms are inflating market returns and hiding concentration risk inside cap‑weighted index funds. Technology ETFs (XLK) have far outperformed the S&P (SPY), leaving typical 70/30 portfolios with large implicit bets on five names that now make up roughly one‑third of the S&P 500. A stall in AI spending could produce large drawdowns that disproportionately hurt near‑retirees via sequence‑of‑returns risk; the author recommends auditing top‑5 weights, aggregating exposures, and gradually shifting new contributions into equal‑weight or international funds to dilute the theme rather than sell into weakness.