Energy Crushed AI This Year

While most investors chased chip stocks, energy climbed around 40% to become the best performing sector of 2026. AI data centers are pulling power off the grid faster than anyone can build it. Our free report names the #1 energy stock to end the year strong.

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🩺 Healthcare Is The Anti-AI Trade

Follow the money, and you will see a quiet shift happening on Wall Street. Over the 65 days through October 19, 2026, healthcare funds pulled in about $4 billion, the most of any sector, while tech funds bled about $6 billion, the worst outflows anywhere, according to Baird Strategas. In plain English, investors are pulling cash out of AI-heavy tech and parking it in boring old healthcare.

Here is the bigger picture. The S&P 500 Health Care Index is up about 23% since April 30, 2026, beating the broad market and every other sector, including tech and energy, Bloomberg reported. The leaders are household names: Eli Lilly ($LLY), AbbVie ($ABBV), and Johnson & Johnson ($JNJ). Until about six months earlier, the sector had badly lagged the market.

So why the sudden love? One phrase keeps coming up. Matt Orton of Raymond James Investment Management said healthcare "is being viewed as an anti-AI trade," sitting on the other side of selloffs tied to AI spending angst. "I think a lot of investors have viewed it as a place to go for safety," he said, adding that its valuation is more attractive.

The proof is in the dips. When CoreWeave slumped as its debt hit distress-type levels, tech suffered its worst week since the April 2025 tariff shock, while healthcare kept its weekly winning streak alive. As Brian Mulberry of Zacks put it, "The nervous money that was scared of AI is moving back into healthcare."

🐂 The Bull Case:

The rotation is backed by hard numbers and real company results, not just vibes. Both the sector's performance and its biggest names are delivering.

• 📊 The numbers are real. From April 30 to October 28, the healthcare fund XLV rose 24.1% while the tech fund XLK gained 20.0% and the S&P 500 managed 8.0%. Since September 30, XLV is up 6.7% and XLK is down 2.4%.

• 💊 The leaders are delivering. Over that same stretch, Eli Lilly jumped 38.3%, AbbVie climbed 37.1%, and Johnson & Johnson rose 19.2%. These are big, profitable companies, not speculative bets.

• 🏦 Wall Street is on board. RBC Capital Markets upgraded healthcare to overweight and cut tech to market weight in October 2026, a notable vote of confidence from a major bank that this rotation has real legs.

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🐻 The Bear Case:

The trade is not bulletproof, and a few cracks are worth watching. Even strong results have stumbled, and tech is not out of the race.

• ⚠️ Even good news can disappoint. Johnson & Johnson reported Q3 sales of $25.4 billion on October 13 and raised guidance, yet the results still dragged the sector to its worst stretch in more than a month.

• 💉 Setbacks sting fast. Moderna fell 18% on October 22 after its melanoma vaccine trial data leaked, and the healthcare index dropped 1.1% on October 23, just a day after an all-time closing high.

• 🔄 Tech still leads the year. From December 31 through October 28, XLK is up 33.1% versus 17.5% for XLV. A defensive rotation like this can also reverse quickly if AI stocks come roaring back.

The sector's biggest test just delivered a big win. Eli Lilly reported its third quarter on October 29, and the numbers were strong. Revenue hit $24.4 billion, up 39% and crushing the $22.61 billion expected, while adjusted earnings of $7.48 per share blew past the $6.26 forecast. Its blockbuster drugs led the way, with Mounjaro sales up 65% to $10.72 billion and Zepbound up 49% to $5.35 billion. Lilly raised its full-year revenue guidance to between $91 billion and $92 billion, and the stock rose about 9% on October 29. Orton had framed the stakes plainly beforehand, saying, "If they do deliver, I think there's scope for healthcare to keep running." AbbVie has guided its 2026 adjusted earnings to between $13.76 and $13.96 per share, so the sector's giants keep setting a high bar.

The Munch Take: There is something gloriously funny about a market so dizzy from AI hype that investors are sprinting into cholesterol pills and hip replacements for safety, but that is exactly where we are. As State Street's Michael Arone noted, folks are not ditching tech entirely, just making their portfolios a little less obsessed with it, which is a healthy instinct after a year of AI euphoria. The honest truth is that tech still leads the full year, so this is a recent winning streak, not a total regime change, and streaks can snap in a hurry. What this really shows is that when one trade gets too crowded and too pricey, money always goes looking for the unloved corner next door. Sometimes the most exciting move in the market is the boring one.

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