Stocks outside the AI bubble now match the S&P 500

A proprietary index from Goldman Sachs that tracks the S&P 500 while excluding artificial intelligence enablers reached parity with the standard benchmark this month. The measure briefly pulled ahead of the traditional index in late October before the two converged as tech stocks rallied in Monday trading. Through October 22, the ex-AI index had gained 12.4%, slightly outpacing the S&P 500's 12% return.

The performance shift stems from the heavy weight of technology in the broader market. Tech and AI-related companies represent about 45% of the S&P 500. This concentration powered index gains for years but has become a drag in recent weeks. The S&P 500 tech sector is down roughly 7% this month, while other segments have held firm or improved.

Investors have reduced exposure to debt and equity from firms building AI infrastructure. CoreWeave and Oracle saw their securities lose ground. Meta Platforms shares dropped nearly 7% on Thursday after the company outlined plans for increased capital expenditure and additional share issuance. Suppliers of power and equipment for the buildout also faced steep declines during the recent selloff. GE Vernova, Bloom Energy, Vistra, and Quanta Services all saw significant price drops.

The ex-AI index lagged the S&P 500 for most of 2026 as investors favored chipmakers and cloud computing firms. That gap narrowed and vanished last week. Money is moving into defensive areas. State Street Consumer Staples Select Sector SPDR ETF, State Street Health Select SPDR ETF, and State Street Utilities Select SPDR ETF have each risen between 7% and 10% this month. Energy stocks are up 10%, a gain linked to the war in Iran.

Ari Wald, an Oppenheimer technical analyst, noted on October 24 that the pendulum has swung back toward non-AI exposure over the last two weeks. Oppenheimer upgraded commercial services and insurance to overweight status last week. The firm recommends Republic Services, Cintas, Verisk Analytics, Broadridge Financial Solutions, MetLife, and Arthur J. Gallagher.

Berkshire Hathaway is benefiting from the rotation away from tech. Its Class B shares are up 8% this month, though they still trail the S&P 500 for the full year. Berkshire holds a diversified portfolio of operating companies, including Geico and Burlington Northern Santa Fe. It also maintains a $364 billion stock portfolio that includes Apple, Coca-Cola, Alphabet, and Bank of America.

Trivector Research points to non-tech compounders as potential opportunities. Eli Lilly shares are up 22% on the strength of its weight-loss drugs. The company plans to file for FDA approval of a next-generation obesity drug early in 2027. Viking Holdings, a cruise operator, has also shown durability. The company reported that 40% of its river capacity and 60% of its ocean capacity is booked for 2027. Viking stock is up 15% this year, trading around $82 against a Wall Street target of $109. Barclays upgraded the company to overweight with a $102 target.