A Goldman Sachs index that excludes AI-related stocks has gained 12.4% through October 22, slightly outperforming the standard S&P 500, which is up 12%. This trend comes as the tech sector, which constitutes about 45% of the S&P 500, has faced a downturn, with a 7% drop this month.
Companies like Meta Platforms have seen significant declines due to increased capital expenditures and share issuance, impacting suppliers such as GE Vernova and Bloom Energy. As investors pivot towards defensive sectors, ETFs focused on consumer staples, healthcare, and utilities have risen between 7% and 10% this month.
Analysts, including Oppenheimer's Ari Wald, suggest that the recent market dynamics favor non-AI companies for diversification. Oppenheimer has upgraded commercial services and insurance sectors, recommending stocks like Republic Services and MetLife. Berkshire Hathaway has also benefited from this rotation, with its Class B shares up 8% this month, supported by its diverse portfolio.
Additionally, companies like Eli Lilly and Viking Holdings are highlighted for their resilience and growth potential, with Lilly's stock up 22% due to successful weight-loss drugs and Viking's strong future bookings. This shift away from tech may indicate a broader market trend favoring stability and diversification in investment strategies