Wall Street just borrowed $500 billion to build AI — here's what it could mean for your 401(k). Are you ready?

Aditi Ganguly

Wed, August 19, 2026 at 4:25 PM GMT+3 6 min read

NVDA -0.94%

Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.

The AI industry just got even more expensive.

On Aug. 10, NVIDIA announced a new partnership with six financial institutions that would provide the chip company with $500 billion in third-party capital to put toward AI infrastructure (1).

Must Read

Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
JPMorgan sees gold hitting $5,000/oz by Q4 — and savvy investors are protecting their wealth with a tax-advantaged Gold IRA. Get your free guide from Priority Gold
The tax breaks in Trump's 'big beautiful bill' expire after 2028. Here are 4 moves to make before the window closes

"We began by building chips. Today, we are helping create a new class of productive, investable infrastructure: AI factories," said Jensen Huang, CEO and founder of NVIDIA, in the company's press release. "We are bringing the world's leading long-term capital providers together to independently underwrite AI infrastructure."

AI companies have been pursuing aggressive growth recently, and it's showing in their capital expenditures. Alphabet and Amazon are both forecasting capital expenditures in the hundreds of billions of dollars, while Tesla is expecting to more than double its expenditures this year, according to CNBC (2).

"We should be spending on capex as fast as we can spend, as fast as we can without it being too wasteful," Tesla CEO Elon Musk said during a recent earnings call, as reported by CNBC. "It's OK to be a little less capital efficient if we get things done sooner."

But will all this spending pay off for AI companies? And how does this spending impact your portfolio's bottom line? Here's what to know.

$500B deal comes as AI grows increasingly unpopular

Much of this massive spending — including NVIDIA's $500 billion deal — is going toward building data centers that AI companies need to expand their operations. Proponents say these data centers will bring more jobs for Americans, especially in the skilled trades.

"Together, we can help deliver the compute capacity that companies need to grow and create more jobs, supporting the continued growth of the US and global economies," BlackRock CEO Larry Fink said about his company's part in the NVIDIA deal (1).

However, while building data centers can employ plenty of construction workers, those jobs are temporary. And data centers generally don't create many long-term positions once they're built.

"Most data centers, you know, they employ about 100 to 200 people," Kartik Hosanagar, codirector of the Wharton Business School's AI research center, told NPR (3). "In fact, when Apple created a $1 billion data center in North Carolina, the news stories reported that there were less than 100 permanent jobs created as a result."

That, along with data centers' economic impacts on local communities, has contributed to growing frustration. According to a Gallup poll, more than 70% of Americans oppose local construction of AI data centers (4). Almost half said they strongly opposed it.

In response, some politicians are starting to crack down on data center projects. New York Governor Kathy Hochul recently put a one-year moratorium on large-scale data center construction in the state (5), while Virginia Governor Abigail Spanberger — whose state contains one of the biggest collections of data centers in the U.S. — recently signed a statewide energy consumption tax on data centers (6).

All this could complicate AI companies' plans to build infrastructure quickly.

You might be overinvested in AI

When it comes to everyday investors, these AI moves might make a bigger impact on your 401(k) than you think, even if you're invested in an index fund like the S&P 500.

Bloomberg estimates that AI-related companies now make up over half of the S&P 500 by weight — a huge increase compared to just a few years ago (7).

For now, that's a good thing. AI is still outperforming other parts of the S&P 500 (8).

If the AI boom eventually loses steam, the fallout could reach your portfolio faster than you might expect. With major stock indexes near record highs and investors piling into companies tied to AI, experts are increasingly questioning whether expectations have gotten ahead of reality.

"Economic research on past technological revolutions points to a worrisome conclusion: a correction of current stock market valuations is likely," economists from the European Central Bank wrote in a blog post (9).

And this time, policymakers may have less room to cushion the blow.

"Unlike in the dot-com episode, today's starting point leaves markedly less room to cut interest rates or use fiscal policy to cushion the fallout," they added.

So, what can you do now?

Diversify beyond the stock market

A good way to fix this problem is by diversifying your retirement portfolio. That way, fewer of your investments are tied up in AI or tech stocks.

There are several ways you could reduce your exposure to AI, including investing in low-risk assets, countercyclical assets like low-income housing or even precious metals.

Simply put, how you approach diversification will depend on your individual needs and risk tolerance.

Start with low-risk instruments

One of the easiest solutions for reducing your portfolio's dependence on stocks is to put some money into investments that are designed to provide more predictable returns.

Certificates of deposit, or CDs, could be one such option. Rather than leaving your money entirely exposed to daily swings of the stock market, a CD allows you to lock in an interest rate for a predetermined period. This means your return isn't dependent on what happens on Wall Street.

For those seeking predictable, reliable growth, a platform like CD Valet can help you find higher-yield options that work for you, whether you're saving for something soon or building a cushion for the long haul.

CD Valet tracks over 40,000 verified rates from FDIC-insured banks and NCUA-insured credit unions nationwide. Unlike other websites, they show every publicly available rate, ensuring you have a comprehensive view of the market.

Plus, their CD rates are updated continuously, so you can shop, compare and open CDs with ease.

Diversify with gold

When investors get nervous about expensive stock valuations, gold often gets another look. That's because the precious metal has a long history as a store of value during periods of economic and geopolitical uncertainty. It isn't dependent on a tech giant's profits or the S&P 500's growth prospects, making it a solid hedge against the stock market.

In fact, gold prices have more than doubled over the past five years, repeatedly reaching new record highs. Over the past year, gold has gained about 30%, compared with roughly 24% for the S&P 500 (10).

One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold.

Gold IRAs allow investors to hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.

To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver on qualifying purchases.

Add real estate to the mix

If your goal is to reduce dependence on the stock market, real estate is another asset worth considering.

Unlike publicly traded stocks, which can move sharply based on investor sentiment, real estate is influenced by factors like housing demand, local employment, rents and the supply of available homes.

The bigger hurdle has traditionally been getting in. Buying a rental property can require a sizable down payment, a hefty mortgage and the willingness to deal with tenants and maintenance.

That's where newer investment platforms like mogul come into play, letting you invest in shares of single-family rental homes nationwide.

Founded by former Goldman Sachs real estate investors, mogul handpicks the top 1% of single-family rental homes nationwide for you. This way, you can invest in institutional-quality offerings for a fraction of the usual cost — while receiving monthly rental income, real-time appreciation and tax benefits.

The team at mogul carefully vets each property, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average yearly return of 18.8%. Their cash-on-cash yields, meanwhile, average between 10% to 12% annually. With investments typically ranging between $15,000 and $40,000 per property, offerings often sell out in under three hours.

Getting started is a quick and easy process. You can sign up for an account and thenbrowse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.

Think AI has further room to run? Keep investing but stay hedged

Of course, there's another side to the AI story. Despite concerns about lofty valuations and massive spending on AI infrastructure, corporate earnings have remained strong.

According to FactSet, out of the 88% of S&P 500 companies that have reported their results from the second quarter of 2026, 86% delivered a positive earnings-per-share surprise, while 76% reported better-than-expected revenue, as of Aug. 7 (11).

Likewise, the blended year-over-year earnings growth rate for the S&P 500 stood at 50.4%. If that number holds, it would represent the index's strongest earnings growth since the second quarter of 2021.

As AI investment continues to translate into stronger profits and productivity, investors shouldn't necessarily respond to bubble fears by abandoning stocks altogether.

But that doesn't mean you have to put every available dollar into the hottest AI names, either. You can continue investing in stocks while spreading your exposure across sectors and asset classes.

Build a portfolio managed by experts

For those who don't want to spend every day deciding whether the market is about to rise or fall, automation can make staying invested a little easier.

One approach is to invest small amounts regularly rather than trying to figure out the perfect time to put a large sum into the market. This strategy, known as dollar-cost averaging, can help smooth out the impact of market swings since you're buying at different prices over time.

For instance, apps like Acorns allow users to invest spare change from everyday purchases automatically — helping them steadily build wealth without having to think about every market move.

Here's how it works: All you have to do is link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio of ETFs managed by experts at leading investment firms like Vanguard and BlackRock. Over a lifetime, that little bit of consistency could go a long way.

With Acorns, you can invest in a dividend ETF with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.

— With files from Kit Pulliam