Although Wall Street has spent the better part of two years cheering an artificial intelligence buildout that has dragged the Nasdaq 100 up roughly 30% over the past year, the technology-packed Nasdaq Composite is starting to wobble at the worst possible moment. The benchmark S&P 500 has slipped, with SPY off about 4% in the past week, and the QQQ has shed roughly 7% over the same stretch. But portfolio manager Jonathan Wellum, speaking on the Thoughtful Money with Adam Taggart podcast, argues this looks like something more serious than a routine pullback. What stands out in his analysis is that today’s AI frenzy ticks every box that preceded the 2000 Nasdaq collapse.
Wellum’s framework is blunt. “Number 1, explosive CapEx spending, sky-high valuations, market concentration amongst players, speculative fever, FOMO investing. And then the 5th is uncertainty in terms of the earnings delivery and the potential overbuild. We’re seeing the same 5 things,” he said. Taggart agreed on air, calling it “5 for 5, yeah, right now.”
The 2000 mirror
Wellum referenced a 78% Nasdaq drawdown through 2001 and 2002, a period during which the S&P 500 itself slid 39% between January 2000 and December 2002. The mirror beat is what followed. Wellum noted that insurance, energy, materials, consumer staples, utilities, and healthcare were the best-performing sectors after that drawdown. His firm is now rotating into those same neighborhoods. As we’ve previously highlighted, defensive quality names tend to outperform when speculative bubbles deflate.
The macro backdrop is rhyming as well. The 10-year Treasury yield sits at 4.53%, in the 96th percentile of its 12-month range. The VIX has climbed 26% over the past week to 19.87. Consumer sentiment has cratered to 49.8 in April 2026, recessionary territory. Meanwhile, QQQ saw $12.7 billion in outflows in Q1 2026, the largest exodus in its 27-year history, and trades at a P/E of 32x. I’ve been watching this setup for months, and the divergence between euphoric tape and collapsing confidence is exactly the classic 2000 fingerprint.
Where the rotation is already happening
The six names below sit in the corners of the market Wellum flagged. None are AI plays. All have beaten earnings consensus four straight quarters.
Insurance. Chubb (NYSE:CB | CB Price Prediction) posted Q1 2026 EPS of $6.82 versus $6.60 expected, with net income vaulting roughly 74% year over year as California wildfire losses normalized. The stock trades at a trailing P/E of 11, with beta of 0.42. Shares have gained about 17% over the past year.
Energy. Exxon Mobil (NYSE:XOM) has rallied roughly 45% over the past year, helped by Guyana production above 900,000 bpd and $15.6 billion in cumulative structural cost savings since 2019. The forward P/E of 13 and beta of 0.15 are the antithesis of an AI multiple. Bank of America clients have already been piling into energy ETFs while net sellers of broad U.S. equities.
Materials and transport. Union Pacific (NYSE:UNP) hauls the real economy. Q1 2026 brought a best-ever terminal dwell of 19.7 hours and bulk volumes up 10%. The pending merger with Norfolk Southern would forge the first transcontinental railroad. The stock has advanced roughly 21% over the past year.
Staples. P&G (NYSE:PG) just doled out its 70th consecutive annual dividend increase, with payments stretching back to 1890. The trailing P/E of 21 and beta of 0.39 describe a fortress balance sheet built for slow, steady compounding. Shares are down about 6% over the past year, exactly the kind of unloved setup Wellum likes.
Utilities. American Electric Power (NASDAQ:AEP) is the pick-and-shovel AI play with regulated economics. Per the company’s SEC filings, Commercial KWh delivery jumped 33% year over year, hyperscaler-driven, and 7 GW of new load agreements signed in Q1 push incremental load to 63 GW by 2030. The 5-year capital plan rose to $78 billion. Shares have climbed roughly 30% over the past year.
Healthcare. Johnson & Johnson (NYSE:JNJ) raised full-year guidance to adjusted EPS of $11.45 to $11.65 after a Q1 revenue beat of $24.06 billion. The 64th consecutive annual dividend increase tells the story. CEO Joaquin Duato said “Johnson & Johnson had a strong start to 2026 and is delivering on its promise for a year of accelerated growth and impact.” Shares have surged roughly 56% over the past year, lapping the tech-heavy benchmarks.
The verdict
Wellum is careful. He warned that if AI capex proves wasteful, “it will be a shock to the market” and would “take largely the whole market down for a period of time.” He also conceded that AI productivity gains may partially offset the demographic drag he sees from China’s fertility rate of 0.87 and North America’s just over 1. Bulls counter that AI earnings will eventually justify current spending, and they might. Historical parallels rhyme. They do not guarantee. Long term, Wall Street still heads higher in the decades to come. The point is the pattern. If five for five turns into six for six on the downside, the boring stuff in your portfolio will look a lot less boring.
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