Non-AI Stocks Match S&P 500 Returns as Tech Sector Slumps

A proprietary index tracking the S&P 500 without AI enabler stocks has matched the performance of the traditional benchmark. Through October 22, this Goldman Sachs measure rose 12.4 percent for the year. The standard S&P 500 gained 12 percent during the same period. The two indices are now trading at similar levels. This shift follows a recent rally in tech stocks during Monday trading sessions.

Technology and AI-related companies currently comprise roughly 45 percent of the S&P 500. This heavy concentration has driven index returns for several years. Recently, this weighting has acted as a drag. The S&P 500 tech sector is down approximately 7 percent this month. Other sectors have maintained their value during the same timeframe.

Market sentiment has turned against companies issuing debt or equity to fund AI infrastructure. Shares of Meta Platforms fell nearly 7 percent on Thursday. The company announced plans for higher capital expenditures and additional share issuance. Suppliers of power and equipment for the AI buildout have also declined. GE Vernova, Bloom Energy, Vistra, and Quanta Services all saw steep drops during the recent selloff.

Goldman Sachs and S&P launched the ex-AI index earlier this year. The methodology starts with the S&P 500 universe. It excludes companies classified as AI enablers. The index then applies standard S&P 500 weighting to the remaining firms. For most of 2026, the standard index outperformed this alternative measure. Investors favored chipmakers and cloud computing firms. That advantage vanished last week as the gap narrowed.

Money is rotating into defensive sectors. State Street ETFs focused on consumer staples, health, and utilities are up between 7 percent and 10 percent this month. Energy stocks are also ahead by 10 percent. Analysts attribute the energy gain partly to the war in Iran. Oppenheimer technical analyst Ari Wald noted a shift in market dynamics. In a note dated October 24, Wald stated that the AI pendulum has swung back toward non-AI exposure over the last two weeks.

Oppenheimer upgraded commercial services and insurance to overweight ratings last week. The firm recommends specific stocks in these sectors. These include Republic Services, Cintas, Verisk Analytics, and Broadridge Financial Solutions. MetLife and Arthur J. Gallagher are also on the list. Diversified firms like Berkshire Hathaway are benefiting from the rotation. Class B shares of Berkshire Hathaway are up 8 percent this month. The company owns a $364 billion stock portfolio that includes Apple, Coca-Cola, Alphabet, and Bank of America.

Trivector Research is looking at non-tech compounders for growth opportunities. Eli Lilly is one such example. The healthcare stock is up 22 percent this year. This gain follows the success of the company's weight-loss drugs. Lilly plans to file for FDA approval of a next-generation obesity drug early in 2027. Viking Holdings, a cruise operator, shows similar durability. The company reported that 40 percent of its river capacity is booked for 2027. Sixty percent of its ocean capacity is also secured for next year.

Viking stock is up 15 percent year to date. The average Wall Street price target is $109 per share. Recent trading prices have hovered around $82. Barclays recently upgraded Viking to overweight. The firm set a price target of $102. This move cites the company's compelling risk and reward profile for investors seeking alternatives to the current tech trade.