Your RRSP could be loaded with AI stocks — Larry Berman explains the billion-dollar risk

In a recent Bloomberg column, Berman argued that AI is still in its early innings, comparable to transformative breakthroughs such as the steam engine or the internet. While he expects volatility in this market to continue, he’s not convinced that the current surge in value is an early indicator of a bubble or an early signal of a sector crash. He frames the overall AI market as a strong, but volatile, transformative tool — a tool that stumbles ever so slightly as it continues to gain ground.

What is a pullback and why is Larry Berman suggesting investors take notice?

A pullback is a temporary price dip. In a typical scenario, a pullback occurs when there is an upward trend for a stock or sector, but the price of an individual stock or fund temporarily drops before bouncing back up.

According to Berman, technical traders — investors who look for trends using data and analysis — watch for pullbacks as a way to buy an asset at a lower price.

Even if Canadians aren’t keen on AI as an investment, Berman’s insight matters.

Turns out millions of self-directed investors now hold AI exposure inside their Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) and don’t even realize it. This is particularly true for passive investors or do-it-yourself investors who concentrate on holding broad-based funds, such as iShares Core Equity ETF Portfolio (TSX: XEQT) or Vanguard All-Equity ETF Portfolio (TSX: VEQT).

That’s because the dominance of AI has prompted a growing proportion of broad index funds to hold AI as part of their basket of funds — and Canadian-listed funds are not exempt.

As Berman suggests, the question isn’t whether AI is real but how much risk investors should take on.

That means each investor needs a clear understanding of how much exposure their savings or retirement account has to this sector and a clear position on whether today’s rally looks more like early internet or the days before the dot-com bust.

So, why is Larry Berman bullish on AI?

Berman’s argument rests on history repeating — but in a good way.

He argues that breakthrough technologies, including the wheel, the steam engine, the semiconductor and the internet, have each delivered long-term productivity gains; Berman counts AI among them.

He tracks the sector through two exchange-traded funds (ETFs): Global X Artificial Intelligence and Technology ETF (TSX: AIQ.TO) and iShares A.I. Innovation and Tech Active ETF (NYSE: BAI), alongside a new index built to measure the token costs and revenue side of AI use.

He also draws a direct line to the last major tech bubble, and says today’s AI leaders do not measure up to the excess of that era. Back then, Intel, Cisco and Nortel Networks were the must-own stocks of 2000 and, according to Berman, AI has not reached that level of mania yet, even as concerns grow about China exporting cheaper AI tools that could squeeze margins across the sector.

Is Berman’s assessment accurate?

While Berman remains bullish on AI as a positive market disrupter — and as an investment — the numbers tell a more cautious story.

The 10 largest companies in the S&P 500 now account for roughly 40% of the index’s total value, a bigger concentration than the roughly 27% held by the top 10 at the peak of the dot-com bubble in 2000, according to Jim Paulsen, formerly chief investment strategist at the Leuthold Group. To put a fine point on it, market data shows that in a recent 28-session rally between late March and early May 2026, just 10 stocks drove 69% of the S&P 500’s total gains.

This concentration — where relatively few companies or one or two sectors drive market performance — is a global concern. According to a Deutsche Bank survey of institutional fund managers, 57% now name an AI valuation crash as the single biggest risk to markets — an even bigger worry than tariffs, inflation or interest rates.

Canadians have been on the edge of a bubble before

Canadians have a homegrown cautionary tale with the rise and fall of Nortel Networks. At its 2000 peak, the Ottawa-based telecom equipment maker represented more than 35% of the value of the Toronto Stock Exchange’s benchmark index; almost a decade later, the firm collapsed after filing for bankruptcy in 2009. The failure not only wiped out employment and wages, but it also decimated pensions and erased retirement savings across the country.

Decades later, Nortel Networks is a reminder that the underlying technology — fibre optics and the early internet — wasn’t fake; the lesson was that concentrated, momentum-driven exposure to any single winner, even a real one, punishes investors hard when growth expectations reset.

What does this mean for your TFSA and RRSP?

To be clear, Canadian-listed AI holdings have already delivered outsized gains.