Traders work on the floor of the New York Stock Exchange (NYSE) as the opening bell rings on October 19, 2026 in New York City.
Angela Weiss | AFP | Getty Images
The non-AI S&P 500 briefly outperformed traditional indexes this year, but it’s now a close race as investors move on to other parts of the market.
Tracked by Goldman Sachs’ proprietary index. S&P500 The stock index, which excludes stocks classified as “AI enablers,” rose 12.4% through October 22, slightly outpacing the standard S&P 500 index’s 12% rise. The Goldman index is now tied with the S&P 500 as tech stocks rose in Monday trading.
High-tech and AI companies make up about 45% of the S&P 500. This weight has helped push the index up for years, but more recently it has turned into debt. While the S&P 500’s tech sector is down about 7% this month, other sectors are holding up.
Investors began to struggle with debt and equity issued by companies such as: coreweave and oracle. shares of meta platform It fell nearly 7% on Thursday after spending heavily on capital expenditures and indicating further plans to issue additional shares.
Companies that provide power and equipment for construction have been hit hard. GE Vernova, bloom energy, Vistra and quanta service Both suffered significant declines in the recent selloff.
Goldman, which introduced the index in collaboration with S&P earlier this year, uses the S&P 500 index as a starting universe, excluding companies deemed to be AI enablers, and then applies the S&P 500 index’s weighting methodology to the remaining universe of companies.
AI trade loses momentum
The old AI index lagged the S&P 500 for much of this year as investors continued to favor chipmakers, cloud computing companies and other companies that would benefit from large AI investments. But that advantage is narrowing and disappeared last week.
Meanwhile, investors are shifting to defensive territory. Something like an ETF State Street Consumer Staples Select Sector SPDR ETF, State Street Health Select SPDR ETF and State Street Utilities Select Sector SPDR ETF It’s up 7% to 10% this month. Energy also has a 10% lead, but this is largely related to the Iran war.
Some analysts recommend sticking with non-AI companies for diversification and protection from further pain in the tech industry. “Over the past two weeks, the AI pendulum has swung back in favor of non-AI exposures,” Oppenheimer technical analyst Ari Wald said in an Oct. 24 note.
Oppenheimer’s two current preferred industries are commercial services and insurance. The firm upgraded these industries to Overweight last week and recommended the following: republic services, Cintas, Verisk analysis, broadridge financial solutions, metlife life and Arthur J. Gallagher.
Berkshire Hathaway We also take advantage of the rotation of technology companies. The company’s Class B shares are up 8% this month, but they still trail the S&P 500 this year.
Berkshire owns a wide range of operating companies, including insurance giant Geico and the Burlington Northern Santa Fe Railroad. It also has a $364 billion stock portfolio that includes companies such as: apple, coca cola, alphabet and bank of america. This diversification could help Berkshire continue to outperform even if the tech sector drags down the S&P 500 index.
Trivector Research sees potential in “non-tech formulators.” healthcare giant Eli Lilly is one way of thinking. Lilly’s stock price rose 22% on the strength of its weight-loss drug. The company has more developments in the pipeline, including a next-generation obesity treatment that it plans to submit for FDA approval in early 2027.
viking holdingsCruise line companies have also proven durable. The company said on its August earnings call that 40% of its riverine capacity and 60% of its marine capacity for 2027 are already reserved. “Based on recent events, we know our guests are proving resilient and continue to book for 2027 and future seasons,” the company told investors.
Viking stock is up 15% this year, but there’s still potential for more upside. Wall Street’s average price target is $109, above the recent price of about $82. Barclays recently upgraded the company to overweight with a $102 target, citing the company’s “compelling risk/reward.”
