S&P 500 without AI briefly outperforms as tech rotation accelerates

Goldman Sachs ex-AI index now neck-and-neck with the benchmark, as defensive and non-tech stocks gain favor

By LineZotpaper AI staff

Published26 October 2026

Read Time3 min

Illustration: S&P 500 without AI briefly outperforms as tech rotation accelerates

A version of the S&P 500 that strips out artificial intelligence stocks briefly pulled ahead of the standard index this year and is now trading neck-and-neck, as investors rotate away from technology and into defensive sectors, according to data from Goldman Sachs and CNBC analysis.

A Goldman Sachs proprietary index tracking the S&P 500 without stocks classified as 'AI enablers' was up 12.4% through Oct. 22, slightly ahead of the standard S&P 500's 12% gain, before tech rallied on Monday to bring the two measures even. The index, launched earlier this year with S&P, excludes companies perceived to be AI enablers and weights the remaining universe with standard S&P 500 methodology.

Tech and AI-related companies make up about 45% of the S&P 500, a heavy weighting that has helped power the index for years but has recently become a liability. The S&P 500 tech sector is down about 7% this month while other sectors have held up. Investors have soured on debt and equity issued by companies like CoreWeave and Oracle. Shares of Meta Platforms sank almost 7% Thursday after it outlined plans to increase capital expenditure and issue additional shares. Companies supplying power and equipment for AI buildout, including GE Vernova, Bloom Energy, Vistra and Quanta Services, also suffered steep declines during the recent selloff.

Meanwhile, investors are rotating into defensive areas. ETFs tracking consumer staples, health care and utilities each rose 7% to 10% this month, while energy gained 10%, partly due to geopolitical factors related to the war in Iran.

Oppenheimer technical analyst Ari Wald said in a note on Oct. 24 that "the AI pendulum has swung back in favor of non-AI exposure over the last two weeks." The firm upgraded commercial services and insurance sectors to overweight, recommending Republic Services, Cintas, Verisk Analytics, Broadridge Financial Solutions, MetLife and Arthur J. Gallagher.

Berkshire Hathaway is also capitalizing on the rotation. Its Class B shares are up 8% this month, though still lagging for the year. Berkshire owns a wide portfolio of operating companies including Geico and Burlington Northern Santa Fe railroad, alongside a $364 billion stock portfolio.

Trivector Research sees potential in "non-tech compounders," such as healthcare giant Eli Lilly. The stock is up 22% on the strength of its weight-loss drugs, with a next-generation obesity drug planned for FDA filing early in 2027. Cruise operator Viking Holdings is also proving durable. The company said on its August earnings call that 40% of its river capacity and 60% of ocean capacity were already booked for 2027. "Based on recent events, we've seen our guests have proved to be resilient and are continuing to book 2027 and future seasons," the company told investors. Viking stock is up 15% this year; Barclays recently upgraded it to overweight with a $102 price target, citing a "compelling risk/reward," while the average Wall Street target is $109.

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Analysis

Why This Matters

The shift from AI to non-AI stocks suggests the market is questioning the returns from years of heavy capital spending by tech companies, which could affect valuations across the sector.
Defensive sectors such as consumer staples, health care and utilities are benefiting, offering investors a buffer against further tech weakness.
The performance of the ex-AI index will be watched as a gauge of whether the AI trade has peaked or is simply pausing.

Background

The S&P 500's heavy weighting in tech and AI companies (about 45% of the index) had driven strong returns for years, but recent sell-offs, including a 7% drop in the tech sector this month and steep declines in AI infrastructure stocks, have prompted a rotation. Goldman Sachs launched its ex-AI index earlier this year to measure the impact of excluding AI enablers.

What to Watch

Whether the S&P 500 ex-AI index continues to match or outperform the standard index in coming weeks, indicating sustained rotation.
Upcoming earnings reports from non-tech companies in Oppenheimer's overweight sectors (commercial services, insurance) for confirmation of the trend.
The progress of Eli Lilly's next-generation obesity drug application; FDA filing in early 2027 could be a catalyst.

Sources

Investors are doing just as well this year by shunning AI. How to invest if the tech trade keeps fizzling · CNBC

Checked

12 claims in this story checked against 1 source: 10 supported.

Show each claim

SupportedOppenheimer analyst Ari Wald said, “the AI pendulum has swung back in favor of non-AI exposure over the last two weeks.”US Top News and Analysis: “The “AI pendulum has swung back in favor of non-AI exposure over the last two weeks,” Oppenheimer technical analyst Ari Wald said in a note on Oct. 24.”
SupportedViking told investors, “Based on recent events, we've seen our guests have proved to be resilient and are continuing to book 2027 and future seasons.”US Top News and Analysis: ““Based on recent events, we've seen our guests have proved to be resilient and are continuing to book 2027 and future seasons,” the company told investors.”
Partly supportedThe tech rotation is accelerating.US Top News and Analysis: “A version of the S&P 500 without AI briefly pulled ahead of the traditional index this year and is now neck-and-neck as investors rotate into other areas of the market.”
SupportedThe ex-AI index gained 12.4% through Oct. 22, slightly ahead of the S&P 500's 12% gain.US Top News and Analysis: “A proprietary Goldman Sachs index tracking the S&P 500 without stocks classified as “AI enablers” was up 12.4% through Oct. 22, edging ahead of the standard S&P 500's 12% gain.”
SupportedThe ex-AI index and the S&P 500 were neck-and-neck after tech rallied on Monday.US Top News and Analysis: “The Goldman index is now neck-and-neck with the S&P 500 as tech rallied in Monday trading.”
SupportedThe index excludes companies perceived to be AI enablers and applies S&P 500 weighting methodology to those remaining.US Top News and Analysis: “Goldman, which launched the measure earlier this year with S&P, uses the S&P 500 as its starting universe and excludes companies perceived to be enablers of AI before applying S&P 500 Index weighting methodology to the remaining universe of companies.”
SupportedTech and AI-related companies make up about 45% of the S&P 500.US Top News and Analysis: “Tech and AI-related companies make up about 45% of the S&P 500.”
SupportedThe S&P 500 tech sector is down about 7% this month while other sectors have held up.US Top News and Analysis: “That heavy weighting has helped power the index for years, but it's turned into a liability lately; the S&P 500 tech sector is down about 7% this month while other sectors have held up.”
SupportedMeta shares fell almost 7% Thursday after the company outlined plans to increase capital expenditure and issue additional shares.US Top News and Analysis: “Shares of Meta Platforms sank almost 7% Thursday after it outlined more plans to spend heavily on capex and issue additional shares.”
SupportedViking said 40% of its river capacity and 60% of its ocean capacity was already booked for 2027.US Top News and Analysis: “The company said on its August earnings call that 40% of its river capacity and 60% of its ocean capacity was already booked for 2027.”
Partly supportedBerkshire Hathaway's Class B shares are up 8% this month but are lagging for the year.US Top News and Analysis: “Its Class B shares are up 8% this month, though it's still lagging behind the S&P 500 this year.”
SupportedEli Lilly is up 22% on the strength of its weight-loss drugs, and plans to file for approval of a next-generation obesity drug early in 2027.US Top News and Analysis: “The stock is up 22% on the strength of Lilly's weight-loss drugs. The company has more in the pipeline, including a next-generation obesity drug that Lilly plans to file for FDA approval early in 2027.”