After nearly three years of pouring money into anything tied to artificial intelligence, many U.S. investors are redirecting capital toward companies viewed as less vulnerable to technological disruption such as oil producers, equipment manufacturers and fast-food chains, The Wall Street Journal reported Sunday.
Some market participants have dubbed the trend the “AI immunity trade,” or “HALO,” shorthand for “heavy assets, low obsolescence.” The idea: businesses rooted in physical infrastructure and tangible goods may be harder to displace with software or automation. Recent beneficiaries include companies such as McDonald’s (MCD), Exxon Mobil (XOM) and farm-equipment maker Deere (DE). Meanwhile, industries perceived to be more exposed to AI-driven upheaval, from asset managers to certain software providers, have lagged.
Over the past month, traditionally defensive or asset-heavy corners of the S&P 500 (SP500) –industrials, materials, utilities and consumer staples — have outperformed the broader index.
Technology shares have slipped, and the so-called Magnificent Seven – Alphabet (GOOG) (GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT), Nvidia (NVDA) and Tesla (TSLA) — have cooled after years of leadership. Through Feb. 20, consumer staples posted their strongest start to a year on record.
Although the S&P 500 (SP500) remains modestly positive for 2026, the calm headline numbers obscure sharp rotations beneath the surface. Traders have rapidly moved out of sectors they fear could be automated or displaced.
In early February, for example, AI firm Anthropic unveiled tools designed to streamline legal and research tasks. The announcement triggered a selloff that wiped out roughly $300 billion in combined market value across software companies, financial-data firms and exchange operators.
The following week, similar concerns weighed on wealth managers, insurance brokers and commercial real-estate stocks. In one unusual episode, an AI-related press release from Florida-based Algorhythm Holdings (RIME) — a company previously known for selling karaoke machines — helped spark a steep drop in transportation shares, marking their worst day since April’s tariff-related volatility.
The recent turbulence builds on a broader rotation that began months ago. Since the Nasdaq Composite last reached a record high in October, gains have spread beyond a narrow group of AI-linked stocks to encompass blue chips, small-cap names and international equities. But what initially looked like confidence in expanding economic growth has, in recent weeks, resembled a defensive crouch.
The shift doesn’t fit neatly into traditional “risk-on” or “risk-off” labels, and the divide is even evident within industries, the Journal reported. Shares of Delta Air Lines (DAL) have risen in February, while travel-booking platform Expedia (EXPE) has dropped sharply. The distinction, investors say, is straightforward: AI might optimize airfare searches, but travelers still need airplanes.
Still, not everyone believes the HALO rotation will prove durable. Technology stocks regained some momentum this week, and the Nasdaq (COMP:IND) outpaced the Dow industrials (DJI). Markets also rallied after the U.S. Supreme Court struck down President Trump’s global tariffs.
Investors haven’t abandoned AI entirely. Data-storage companies such as Seagate (STX) and Western Digital (WDC) rank among this year’s top performers in the S&P 500. Retail traders, meanwhile, continue to favor mega-cap technology names including Microsoft (MSFT), Palantir (PLTR) and Amazon (AMZN), according to J.P. Morgan analysts cited by the Journal.
The coming week could provide a key test for sentiment around artificial intelligence. Nvidia (NVDA) is scheduled to report earnings Wednesday, with Salesforce (CRM), Workday (WDAY) and Home Depot (HD) also set to release quarterly results.
Recent volatility, combined with questions about whether large technology firms are overspending in an AI arms race, may suggest a maturing phase of the investment cycle. After years of betting broadly on potential AI winners, markets appear to be demanding clearer proof of sustainable returns, the Journal reported.