Katie Stockton, founder and managing partner at investment adviser Fairlead Strategies, said she is seeing breakouts in non-technology sectors as stocks linked to artificial intelligence face volatility.
Stocks related to artificial intelligence have faced a pullback, having previously been a boon for the S&P 500 - but this could be the moment your nontechnology holdings have been waiting for.
Katie Stockton, founder and managing partner at investment adviser Fairlead Strategies, told host Matt Ziegler on a recent episode of the Excess Returns podcast that when tech stocks underperform, the relative performance of other sectors begins to look a lot better.
"So it's kind of an interesting thing that relative strength can improve for just about everything else when it has been a narrow tech-led environment," she said. " And that's indeed what is happening."
Market breadth and market leadership are two very different things, Stockton said, outlining that semiconductor stocks have had particularly narrow leadership. And, while participation has remained fairly strong, there hasn't been much outperformance outside the sector, until recently.
But now, Stockton said she is seeing upside breakouts - which is when a stock moves beyond its resistance level, indicating a potential further climb as trading volume grows - in other areas, while shares in semiconductor companies continue to experience volatility.
Fairlead Strategies pointed to buying momentum in the healthcare, industrial, biotech, insurance and utility sectors.
"We're really very respectful of breakouts when they happen because that's the breadth," Stockton said. "So now we have good breadth."
She added that the firm has generally seen solid follow-through across breakouts, with rallies often seen for stocks passing their 200-day moving averages.
According to Citigroup, "Magnificent Seven" stocks - Alphabet $(GOOGL)$, Amazon (AMZN), Apple $(AAPL)$, Meta $(META)$, Microsoft $(MSFT)$, Nvidia (NVDA) and Tesla $(TSLA)$ - declined 6% on an equal-weighted basis in the S&P 500 during the first six months of the year, while the other 493 stocks climbed 0.7% on average.
The S&P 500 SPX is up around 10% since the start of the year, compared with the Roundhill Magnificent Seven ETF MAGS, which is up just 0.5% in the same time, as investors grow more concerned about whether continuously boosting AI spending will yield high returns.
-Nora Redmond
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July 10, 2026 07:59 ET (11:59 GMT)
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