S&P 500 ex-AI gauge matches benchmark as investors rotate beyond tech

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S&P 500 ex-AI keeps pace

Highlights

Goldman Sachs' S&P 500 ex-AI index rises 12.4% through Oct. 22, briefly outperforming the S&P 500's 12% gain as AI-linked stocks retreat.
S&P 500 technology sector drops about 7% this month while ETFs for consumer staples, healthcare, and utilities rise 7–10%, reflecting a rotation into defensive sectors.
Berkshire Hathaway Class B shares gain 8% this month and Eli Lilly rises 22% year-to-date, as investors favor diversified and non-tech compounders amid ongoing tech sector weakness.

Rotation narrows the gap with the benchmark

As reported by CNBC, a proprietary Goldman Sachs index tracking the S&P 500 without companies classified as AI enablers rises 12.4% through Oct. 22, slightly ahead of the S&P 500's 12% gain before the two measures move back to roughly even as technology shares rebound in Monday trading.

The crossover follows a sharp retreat in AI-linked stocks after the ex-AI gauge trails the benchmark for most of 2026. Technology and AI-related companies account for about 45% of the S&P 500, and that concentration, which supports the index for years, is now weighing on performance as the S&P 500 tech sector falls about 7% this month while other sectors hold up better.

Investors also pull back from debt and equity tied to companies such as CoreWeave and Oracle. Meta Platforms shares drop almost 7% on Thursday after the company outlines additional heavy capital spending plans and new share issuance, while suppliers to AI infrastructure including GE Vernova, Bloom Energy, Vistra and Quanta Services also post steep declines during the recent selloff.

Goldman launches the measure earlier this year with S&P by starting with the S&P 500 universe, removing companies seen as AI enablers and then applying standard S&P 500 weighting to the remaining stocks. That setup turns the index into a live test of whether investors can match broad-market returns without relying on the AI trade.

Defensive sectors and diversified companies gain favor

As the AI trade weakens, investors rotate into more defensive parts of the market. Exchange-traded funds focused on consumer staples, healthcare and utilities rise 7% to 10% this month, while energy gains about 10%, though the move there is tied more closely to the war in Iran.

Some analysts argue that non-AI exposure offers diversification and protection if the weakness in technology deepens. Oppenheimer technical analyst Ari Wald says in an Oct. 24 note that the AI pendulum swings back in favor of non-AI exposure over the prior two weeks, and the firm upgrades commercial services and insurance to overweight, highlighting Republic Services, Cintas, Verisk Analytics, Broadridge Financial Solutions, MetLife and Arthur J. Gallagher.

Berkshire Hathaway is also benefiting from the shift away from tech, with its Class B shares up 8% this month even though they still trail the S&P 500 for the year. Its mix of operating businesses, including Geico and Burlington Northern Santa Fe, alongside a $364 billion stock portfolio spanning Apple, Coca-Cola, Alphabet and Bank of America, gives investors a diversified alternative if technology continues to drag on the broader index.

Trivector Research also points to non-tech compounders such as Eli Lilly and Viking Holdings. Eli Lilly shares are up 22% as its weight-loss drug franchise supports the stock and the company prepares to seek FDA approval for a next-generation obesity treatment early in 2027, while Viking says on its August earnings call that 40% of river capacity and 60% of ocean capacity are already booked for 2027, underscoring resilient travel demand.

In our earlier analysis of the S&P 500’s pullback, we highlighted how weakness in technology and semiconductor shares—alongside growing doubts about the durability of AI-related investment and higher borrowing costs—dragged the index lower. We also noted that the SPX slipped below key short-term moving averages, making nearby support and resistance levels important markers as volatility increased.

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