Siddharth Eswaran, 38, a software engineer based in the United States, has spent his career inside America’s biggest technology companies: Amazon and Uber and now at another major US-based tech company.Along the way, each employer paid him large chunks of his compensation in restricted stock units (RSUs), most of which he held on to. In 2021, he sold his Amazon shares only to fund a down payment on a house in Seattle, Washington state, and dipped into his Uber stock in 2023 after a layoff.Since then, rather than selling his RSUs, Eswaran has borrowed against his portfolio through a securitiesbacked line of credit, allowing the shares to compound. In recent times, however, his approach has changed.“In my current job (company name withheld on request), I am selling shares as soon as they vest and then reinvest them in an S&P 500 index fund,” says the 38-year-old. The trigger was months of weak sentiment and uncertainty about layoffs.His older Amazon and Uber holdings stay put—partly because selling would trigger a large tax bill and partly because his adviser says the two stocks fall under different sectoral classifications, leaving him decently diversified.ALSO READ | RSU vs ESOP: Which is better for you as employee? Pros and cons explainedEswaran says had his entire net worth been in one stock, he would have considered diversifying a few years ago. His dilemma is playing out across thousands of households, both in India and the US. The artificial intelligence (AI)-led rally in Meta, Alphabet, Microsoft, Nvidia and other tech company stocks has created enormous wealth for employees paid in stock. It has also left many with 50-80% of their net worth riding on a single company’s shares. This larger concern is not whether AI stocks will crash; it is about portfolio construction.How RSUs workMillions of Indian professionals, both at home and in the US, are employed by American companies—especially those labelled ‘Big Tech’ such as Google parent Alphabet, Amazon, and Microsoft—and receive RSUs or employee stock option (ESOPs) as a significant portion of their total compensation.RSUs are shares that a company promises to give you for free, subject only to a vesting period, i.e. the time you must wait for these units to turn into stocks. You pay nothing to receive them. Once vested, they convert into actual shares in your brokerage account, and you can hold or sell them. For example, if you are granted 100 RSUs and 25 vest each year over four years, you receive 25 actual shares annually.ESOPs work differently: they give you the right, but not the obligation, to buy shares at a pre-fixed price called ‘strike price’. If the stock’s market price rises above that strike price, you profit. If it does not, the options become worthless. ESOPs require you to pay to convert options into shares. RSUs do not.The deeper problem is structural. Your salary and your portfolio depend on the same company. That’s double the risk. When layoffs occur, salaries disappear, RSUs vest, bonuses stop, and ESOP values decline. Everything happens together.ALSO READ | Three big market crashes in 25 years: 7 investment portfolios show why diversification is the best defence against market volatilityThe quiet exitThe selling has already begun, quietly. Vested Finance, an investment platform, has seen a 100% increase in fund flows from ESOP and RSU accounts since April, as employees increasingly look to diversify away from concentrated wealth in a single company, especially in the AI space.The transfers are led by individuals working at companies such as AMD, Intel, Microsoft, Google, Adobe and Qualcomm.“Once it becomes more than 50-60% of your net worth, you should start diversifying,” says Vested Finance CEO Viram Shah. “Ideally, 20-30% in one stock, especially where you’re getting your income from, is the maximum (you should hold). Most people, until they are educated on this, are actually sitting on maybe 70- 80% of their net worth in that stock, which is just too much risk.”At global investing platform Paasa, the destination of that money is striking. Co-founder and CEO Nitish Sahni says that for an employee moving their RSUs, 90% of the assets under management tend to go to UCITS ETFs— exchange-traded funds domiciled in Europe. The most popular funds on the platform include semiconductor, S&P 500 and emerging markets UCITS ETFs. International investors, including those outside the US, prefer UCITS ETFs primarily because they bypass harsh American tax laws, such as the 40% US estate tax and high dividend withholding rates.How one US-based techie manages his RSUs