Stocks Without AI Are Beating the S&P 500 by 6 Points This Month
Something unusual happened in October: the parts of the market farthest from AI surged while megacap tech stalled, and now a record-breaking gap is sitting right in the path of the biggest earnings week of the year.
On October 27, 2026, The Kobeissi Letter posted on X: “BREAKING: The S&P 500 excluding AI stocks has outperformed the S&P 500 by +6.4 percentage points so far in October, on track for the best relative monthly performance on record.” In September, the same measure trailed by 5.1 percentage points. The prior monthly record of +3.6 percentage points was set in July.
The post did not name the index behind its figure, so the number is the newsletter’s own measure. October ends on October 30, which means every record claim here is still only on track.
For anyone with an S&P 500 fund in a retirement account, the question is whether money is spreading across the market or only pausing before megacap earnings pull it back into AI stocks.
Real Funds Show the Same Split
An S&P ex-AI index launched in February 2026, when AI-related companies made up about 45% of the S&P 500. In the week through October 15, that index rose 2.4% and beat the S&P 500 by 3.29 percentage points.
By our calculation, from the September 30 close to October 27, the Invesco S&P 500 Equal Weight ETF (NYSEARCA:RSP) rose 4.57% to $217.52. Over the same stretch, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) gained 0.92%, and the Invesco QQQ Trust (NASDAQ:QQQ) fell 2.50%.
That puts RSP 3.65 points ahead of SPY. RSP still has AI companies. But each one is a small piece of the fund, so the gap supports the broadening case without matching the ex-AI figure. SPY’s largest single holding alone made up 7.58% of the fund as of March 17.
Defensive Sectors Carried October
Most of the gains came from sectors with little AI exposure. Energy and consumer staples sector funds rose 10.91% and 8.13% from September 30 through October 27. The Health Care Select Sector SPDR Fund (NYSEARCA:XLV) gained 6.39%.
The Nasdaq Composite slipped 1.43% over that period while the S&P 500 added 0.93%. Defensive gains that large in under a month suggest some buyers came in late.
Chip stocks rallied after Anthropic filed for its IPO. On October 26, RSP rose 0.35%, compared with 0.71% for SPY and 1.11% for QQQ.
On October 27, the PHLX Semiconductor Index jumped 3.60%. Technology led all sectors with a 1.70% gain while energy fell 2.05%, and RSP added 0.11% against 0.56% for SPY and 1.27% for QQQ.
Megacap Earnings and the Fed Will Settle October
The Fed announces its rate decision on October 28. Two megacap cloud companies report that day and a third reports on October 29.
Robert Quinn of Goldman Sachs (NYSE:GS | GS Price Prediction) said $21.8 billion of buying in Nasdaq futures since September 29 has driven non-dealer net length to a record. Net length is how far funds and other non-dealers are long more contracts than they are short. He warned: “If announcements from Amazon, Microsoft and Alphabet fail to impress, meaningful futures selling could ensue.”
When that many investors hold the same position, moves get bigger in both directions, as strong results bring in the last buyers and lift AI stocks further. Weak results lead those holders to sell at the same time. Riding a crowded trade is fine as long as you have planned the exit, which is the whole subject of our free bubble survivor’s handbook.
What Equal Weighting Means for RSP Holders
Investors comparing RSP with a core SPY position should study how the two funds differ. At each rebalance, equal weighting trims winners and adds to losers, limiting how much the fund depends on a few AI names.
Equal weight usually trails in years when AI leads and pulls ahead when gains spread across more stocks, since SPY already carries heavy AI exposure, while RSP spreads its weight more evenly across the rest of the market.
XLV offers a more defensive profile, although it has already climbed sharply in October and covers a narrower piece of the market.
For a clear test, compare RSP with SPY at the October 30 close. If the megacap reports wipe out RSP’s October lead, the move was a short rotation and the broadening case weakens. If the lead holds, the broadening is real.
Contact [email protected] for any questions or corrections.
Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
