Non-AI Stocks Match S&P 500 Gains as Tech Leadership Falters

A Goldman Sachs index tracking the S&P 500 while excluding companies classified as “AI enablers” has matched the benchmark’s performance this year, rising 12.4% through late October compared with the standard index’s 12% gain. The parity marks a sharp reversal from earlier in 2026, when AI-driven heavyweights powered the market higher.

Technology and AI-related firms account for roughly 45% of the S&P 500’s weight, a concentration that propelled the index for years but has become a drag in recent weeks. The tech sector has slid about 7% this month while other sectors have held firm, prompting a rotation toward defensive corners of the market.

Sentiment has soured on capital-intensive AI infrastructure plays. Shares of CoreWeave and Oracle have come under pressure, while Meta Platforms dropped nearly 7% after signaling heavier capital expenditure and additional share issuance. Power and equipment suppliers tied to the data-center buildout — including GE Vernova, Bloom Energy, Vistra, and Quanta Services — have suffered steep declines during the pullback.

Goldman’s ex-AI measure, launched earlier this year with S&P Dow Jones Indices, starts with the S&P 500 universe, removes companies perceived as AI enablers, then reapplies the index’s weighting methodology to the remaining constituents. The gauge lagged the headline index for most of 2026 as investors favored chipmakers and cloud providers, but that gap closed completely last week.

Rotation favors defensives and compounders

Defensive sector ETFs have captured inflows. The Consumer Staples Select Sector SPDR, Health Care Select Sector SPDR, and Utilities Select Sector SPDR funds are each up 7% to 10% this month. Energy has also risen roughly 10%, though geopolitical tensions are a primary driver there.

Technical analysts see the shift persisting. “The AI pendulum has swung back in favor of non-AI exposure over the last two weeks,” Oppenheimer’s Ari Wald wrote on Oct. 24. The firm upgraded commercial services and insurance to overweight, highlighting Republic Services, Cintas, Verisk Analytics, Broadridge Financial Solutions, MetLife, and Arthur J. Gallagher.

Berkshire Hathaway’s Class B shares have climbed 8% this month, benefiting from its diversified mix of operating businesses — including Geico and BNSF Railway — and a $364 billion equity portfolio spanning Apple, Coca-Cola, Alphabet, and Bank of America. That breadth may shelter the conglomerate if tech continues to weigh on the broader index.

Trivector Research points to “non-tech compounders” such as Eli Lilly, whose shares have advanced 22% on the strength of its weight-loss franchise and a pipeline that includes a next-generation obesity drug targeted for FDA filing in early 2027.

Viking Holdings, a cruise operator, has also shown resilience. Management reported in August that 40% of river capacity and 60% of ocean capacity for 2027 was already booked, underscoring durable consumer demand. The stock has gained 15% year-to-date, yet trades below the average Wall Street price target of $109. Barclays recently upgraded the name to overweight with a $102 target, citing a compelling risk-reward profile.

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