Coca-Cola in Focus as Investors Rotate Out of AI

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•  10 Nov 2026
 

Investors are rapidly moving money out of AI stocks and into defensive sectors such as consumer staples, health care, and utilities, fearing the bull market in AI stocks is nearing its end. The sharp rotation continued on Tuesday as the Nasdaq fell again after rebounding on Monday. The MSCI global consumer staples index rose 10.6% in October, its largest monthly gain since 1998, while the MSCI global technology index has lost more than 13% since the start of October. The MSCI global health care index gained 9.8% in October, its second-largest monthly gain this century after the jump at the start of the COVID-19 pandemic. Both defensive sectors have held on to those gains so far in November.

Technology has lost its shine, said Guy Miller, chief market strategist at Zurich Insurance Group. He said investors are seeking to diversify their portfolios, driving demand for consumer staples and other parts of the market. After years in which AI stocks lifted global indexes, investors are seeking steadier revenues.

AI stocks began to falter in October as investors questioned whether massive spending on AI infrastructure would generate the profits already priced into those shares. After leading market gains for years, AI stocks came under scrutiny over both the pace of data center construction and the returns those facilities would generate. Those concerns peaked last week after Democrats won decisive victories in US congressional midterm elections and gubernatorial races. The selloff in global technology stocks deepened on concerns that Democrats would try to slow construction of AI data centers.

Citi analysts described the rotation into defensive stocks as violent and said those stocks could continue to outperform cyclical stocks next year. The shift in investor preferences could persist beyond the latest technology selloff. On Monday, Beata Manthey, head of European equity strategy at Citi, explained the downgrade of US and global technology stocks from overweight to neutral. She pointed to wider credit spreads, slower earnings revisions, and a sharp drop in AI sentiment, particularly after the US midterms.

Health care and consumer staples stocks were caught in the selloff last week as volatility rose. Investors took that as a warning that defensive sectors could also come under pressure if selling spreads. Shaver said holding defensive stocks and betting against technology stocks had been profitable in recent weeks, but the trade was exposed to shifts in sentiment. He said defensive sectors now trade at rich valuations while parts of technology have already fallen sharply, leaving room for the trade to move in either direction.

Others see the start of a more lasting reversal of the trends of recent years. Matthew McLennan, head of global value at First Eagle, said last week’s technology losses were a reminder that breakthrough innovation does not guarantee attractive returns for investors. He expects investors to shift more money toward overlooked parts of the market where valuations look more reasonable and business fundamentals remain sound.

October data show a sharp shift toward stocks with steady revenues, and technology continued to drag indexes lower on Tuesday. After the steep rally in defensive stocks, any rebound in AI shares could quickly reverse the rotation. The questions are how much of the economic impact of AI is already priced into stocks and how much investors are willing to pay for stability while that remains uncertain.

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