New Trend of Rotation in US Stocks: "Anti-AI" Stocks Become Safe Haven, Tech Stocks are "Abandoned"

As concerns grow among investors about the disruptive impact of artificial intelligence (AI), the U.S. stock market is experiencing a significant sector rotation. Companies in industries with business models that are difficult to replace with AI technology—those with "anti-AI" characteristics—are becoming the "new favorites" of investors, while technology stocks that previously led a three-year bull market are facing increasing selling pressure.

As of Thursday's close, the S&P 500 index has fallen about 2% over four days, with software stocks leading the decline with a cumulative drop of 9.9%, and the information technology (IT) sector down 3.9%. In contrast, home builders, transportation companies, and heavy machinery manufacturers recorded strong gains, with related industry stocks rising approximately 6.1%, 4.8%, and 4.0%, respectively. The consumer staples sector has risen 5.2% over four days, poised for its best single-week performance since 2022.

The catalyst for this rotation is the new tools launched by AI startup star Anthropic, which have intensified investors' concerns that AI will disrupt existing technology business models. Meanwhile, the Dow Jones Industrial Average, which includes many manufacturers and traditional economic giants, is regaining new appeal.

In Friday's early trading, all three major U.S. stock indices rose more than 1%. The Dow briefly surged over 1,000 points in the early afternoon, with a gain of slightly more than 2%, showing a strong rebound that outperformed the S&P and the tech-heavy Nasdaq 100 index. This could set a record for the highest closing price, reversing the previous three weeks of declines, while the Nasdaq is set to decline for four consecutive weeks, and the Nasdaq 100 will decline for two weeks in a row, with the previously rebounding S&P expected to retreat.

This shift overturns the core logic that has driven the U.S. stock market bull run for the past three years. Technology stocks had long led the market due to expectations that AI would transform the economy, but now investors are worried that many tech companies will fall behind in this transformation, making the world of physical goods comparatively more attractive.

The Strong Rise of "Anti-AI" Sectors

The volatile movements of U.S. stocks this week highlight that investors are turning to sectors with "anti-AI" characteristics.

Michael O'Rourke, Chief Market Strategist at JonesTrading, wrote in a report this week:

"Investors are shifting towards sectors that are 'resistant to AI impacts.' These sectors have tangible businesses and components of the real world. They are good defensive choices, and 'mundane' stocks may have never been so attractive."

Home builders and construction product manufacturers are seen as typical representatives of this characteristic.

Citigroup analyst Anthony Pettinari pointed out that the core activities of these industry stocks—manufacturing, distribution, and assembly—are not the types of jobs that AI can replace. Although Pettinari described the earnings performance of these industry stocks as "mediocre," the index for home building and residential construction-related stocks has risen over 10% since 2026, in stark contrast to the S&P 500 index, which has risen less than 0.8% as of Friday's intraday trading.

Jay McCanless, an analyst studying home builders at Citizens, stated, "Ultimately, you still need humans to build houses there," and noted that the timing is favorable for this sector, coinciding with the spring home buying season. "If the rotation in tech stocks helps to push up the prices of the builders I cover, that would be even better." Manufacturers and transportation companies also performed strongly, both achieving their best weekly performance since May 2025. Investors have been increasing their holdings in companies like Deere & Co. and FedEx Corp. for several weeks, encouraged by falling interest rates and the resilience of the U.S. economy. Strong manufacturing data released on Monday brought more optimism, just as investors began to pull back from the tech sector and look for other investment avenues. Baird investment strategist Ross Mayfield stated that this combination has driven the accelerated rise of industrial stocks.

Consumer Staples and Chemical Stocks Favored

Consumer staples and chemical stocks also fall into the category of "anti-AI" companies. The consumer staples sector, composed of companies like Dollar General Corp. and Dollar Tree Inc., performed the best among the S&P 500 sectors this week.

Chemical stocks, which plummeted significantly in 2025 due to declining demand and tariff issues, are currently recovering. Investors hope that business will improve, as key markets for the chemical industry—manufacturing and housing construction—are expected to expand in 2026. This has boosted Dow Inc., which produces chemicals for industrial, packaging, and materials applications, as well as LyondellBasell Industries NV, which produces polymers, chemicals, and fuel products.

Morningstar analyst Seth Goldstein stated:

"Investors are focusing on the potential rebound in profitability for bulk chemicals this year, as well as the improving outlook for demand recovery, while viewing specialty chemicals as a more defensive choice, as we see funds rotating out of high-growth sectors like technology."

As of Thursday, the combined index of sectors such as trucking, machinery, and consumer staples reached an all-time high, while the Nasdaq 100 index is down 6% from its historical peak set at the end of October last year. The index also rose over 1% in early trading on Friday, but is still expected to have a cumulative decline of over 2% for the week.

Baird's Mayfield noted that if investors "take profits in software stocks or sell software stocks due to AI prospects, they can transition into many very good stock options."

Bank of America Warns of Tech Giants Losing Appeal

Bank of America strategists stated that as tech giants lose their allure, U.S. small-cap and mid-cap stocks are the best bets ahead of the midterm elections.

The Bank of America team, led by Michael Hartnett, pointed out that U.S. President Trump’s "aggressive interventions" to lower energy, healthcare, credit, housing, and electricity prices are putting pressure on sectors including energy giants, pharmaceuticals, banks, and tech giants.

Bank of America noted that the shift from a light-asset model to a heavy-asset model poses a "significant threat" to the dominance of the "seven tech giants" in the U.S. stock market.

According to Bank of America’s estimates, large tech companies' capital expenditures in the AI sector this year are about $670 billion, equivalent to 96% of their cash flow, while this ratio was only 40% in 2023.

Bank of America strategists bluntly stated that these tech giants "no longer have the best balance sheets and no longer have the largest stock buybacks." As of this Thursday, the Nasdaq 100 Index has fallen approximately 4.6% over three days, marking the largest three-day decline since April 2025 when Trump announced the so-called reciprocal tariffs. Since the beginning of the year, the S&P 500 Index has lagged its equal-weighted version by 4.2 percentage points, further confirming that the market leadership is undergoing a shift