Goldman Sachs' S&P 500 ex-AI index, ticker SPXXAI, has outperformed the standard benchmark since late June as investors rotate into biotech, regional banks, and consumer entertainment. The divergence between AI and non-AI stocks has grown so wide that Goldman's hedge fund tracking basket just posted its worst month against the S&P 500 in over two decades.
The trade that defined Wall Street for years was simple: buy anything tied to artificial intelligence. That trade is now reversing. Goldman Sachs, working with S&P Dow Jones Indices, launched SPXXAI on February 20, 2026, an index built by stripping AI-enabling companies out of the S&P 500.
An index built to expose a divide
Goldman's exclusions remove companies representing about 45% of the S&P 500's total market capitalization. Over the three years before SPXXAI launched, the full S&P 500 returned 76%, while the ex-AI version returned just 32%. Since late June, however, that gap has flipped, with the ex-AI index outperforming the regular benchmark.
Analysts point to the correlation between Goldman's US Broad AI Index and the S&P 500 ex-AI Index falling to between -0.53 and -0.60 by late June 2026, effectively inverse movement between two segments of the same market. Goldman strategist Ben Snider pointed to three themes driving the shift: consumer-experience stocks in entertainment and hospitality, "compounders" with steady earnings growth, and potential M&A candidates.
Consumer names lead the rotation
The consumer-experience basket has been the standout. An equal-weighted group of 36 such stocks returned 17% year-to-date by July 2026, beating the broader consumer discretionary sector by 17 percentage points.
Hedge funds caught on the wrong side
The rotation has hit hedge funds hard. July 2026 marked the worst single-month underperformance of Goldman's Hedge Fund VIP list against the S&P 500 in over 20 years, a list that tracks the most popular hedge fund holdings and had skewed heavily toward AI names. As managers pulled back from AI exposure mid-year, they sold into weakness just as the non-AI side of the market surged, compounding the damage to returns.
Source: Crypto Briefing
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