Investors are doing just as well this year by shunning AI. How to invest if the tech trade keeps fizzling — SkimNews
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- Goldman Sachs' proprietary S&P 500 index excluding AI enablers gained 12.4% through Oct. 22 versus 12% for the standard index, falling back to neck-and-neck as tech rallied Monday.
- S&P 500 tech and AI-related companies represent about 45% of the index, while its tech sector fell roughly 7% this month as other sectors held up.
- Meta Platforms sank nearly 7% Thursday after outlining heavier capital spending and additional share issuance, as investors also soured on debt and equity from CoreWeave and Oracle.
- State Street Consumer Staples Select Sector SPDR ETF and peer health and utilities funds gained 7% to 10% this month as investors rotated defensively, while energy rose 10%, a gain more closely linked to the war in Iran.
- Oppenheimer upgraded commercial services and insurance to overweight, naming Republic Services, Cintas, Verisk Analytics, Broadridge Financial Solutions, MetLife and Arthur J. Gallagher after Ari Wald said the "AI pendulum" had swung toward non-AI exposure.
- Berkshire Hathaway rose 8% this month as it capitalized on the tech rotation, though its Class B shares still lag the S&P 500 for the year; its $364 billion portfolio includes Apple, Coca-Cola, Alphabet and Bank of America.
- Trivector Research highlighted Eli Lilly and Viking Holdings as "non-tech compounders": Lilly shares rose 22% on weight-loss drugs and a planned early-2027 drug filing, while Viking gained 15% this year with 40% of river and 60% of ocean 2027 capacity booked.
Why it matters: The roughly 45% tech-and-AI weight in the S&P 500 makes the sector's 7% monthly decline material for S&P 500 holders, while the ex-AI benchmark's 12.4% gain through Oct. 22 erased its earlier deficit. Berkshire Hathaway's 8% monthly rise and Oppenheimer's overweight ratings for insurers and commercial services show where diversified exposure has gained favor.
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