Even Wall Street is getting tired of AI! Funds from the US stock market are quietly flowing into the remaining 493 companies in the S&P 500.

Over the past three years, the concept stocks of artificial intelligence (AI) have been dominating the US stock market, driving related sectors up by 78% in total. However, an increasing number of investors now believe that the uptrend led by the "Big Seven" in this market is coming to an end. Concerns are growing in the market about whether AI can truly bring disruptive changes to the US economy and create substantial profits. This has caused investors' fervor for the technology to gradually cool down and turn into anxiety, while also prompting funds to start flowing into the stocks of the "other" 493 companies in the S&P 500 index, especially those enterprises that are expected to benefit the most from the anticipated economic recovery. "I call this phenomenon 'AI aesthetic fatigue'," said Ed Yardeni, President and Chief Investment Strategist of Yardeni Research. "I am getting tired of it, and I suspect many others are wary of this topic as well." If the market sentiment shifts, it will mark the end of this round of strong uptrend cycle dominated by a few stocks, which is unprecedented in history. Since the impressive debut of ChatGPT under OpenAI in 2022, the market value of companies like NVIDIA Corporation, Microsoft Corporation, and Apple Inc. has increased by trillions of dollars. Alphabet Inc. Class C and Meta have also performed well, along with second-tier companies in the AI industry chain like Broadcom Inc. and Oracle Corporation being drawn into this wave. However, this change in market sentiment has quietly begun - since the S&P 500 index hit a historic new high at the end of October last year, there has been a wave of selling in November. As of Monday's close, an index tracking the "Big Seven" has dropped by 2% since October 29, while the index of the remaining 493 component stocks of the S&P 500 has risen by 1.8%. Clearly, market funds are shifting from popular growth stocks to sectors with stronger defensiveness and more reasonable valuations. The Defiance Large Cap Ex Magnificent Seven ETF, listed at the end of 2024, has seen continuous net inflows for six months until the end of 2025, with the fund inflow in December growing three times compared to November. The fund saw a 15% increase in the entire year of last year, with the majority of gains concentrated in the second half of the year. Yardeni said the performance of the other 493 component stocks of the S&P 500 in 2025 was "impressive". This strategist pointed out that despite the establishment of an efficiency department by the US government, the implementation of tariff policies by the Trump administration, and signs of weakness in the labor market, the profit margins of these companies remain high and have not been "squeezed". If the economic situation improves, the prospects for cyclical sectors and growth-oriented sectors will also improve, providing ample opportunities for investors who wish to move away from the era dominated by technology giants. Lending institutions like JPMorgan Chase and Bank of America Corp are poised for performance growth; and as consumer confidence rebounds, people will be more willing to buy Nike, Inc. Class B sneakers or book vacations through Booking Holdings, benefitting the non-essential consumer goods sector. However, based on historical experience, once the dominance of the "Big Seven" ends, the US stock market is likely to experience volatility. "For a bull market, the ideal outcome is for market dominance to transition smoothly to the broad camp of the other 493 component stocks of the S&P 500 index," said Doug Peta, Chief US Investment Strategist at BCA Research. "However, historically, bull markets dominated by a few strong stocks often evolve differently." Peta cites the end of the "Nifty Fifty" market in 1973 and the burst of the dot-com bubble at the beginning of 2000 as examples, cautioning investors to remain vigilant. In both of these historical events, when the leading stocks that had dominated the market for a long time encountered difficulties, the overall market saw a decline. Despite concerns in the market that current capital expenditures may not be sustainable, and that valuations of some individual stocks are too high, Peta believes that the AI investment frenzy is not yet over. Meanwhile, investors in the AI field have become more cautious. Previously, any company associated with AI would see its stock price rise in response, but this "one-size-fits-all" investment frenzy has now become polarized, with former AI favorites like Oracle Corporation experiencing heavy losses. "In my opinion, the dominance of the Big Seven is not over yet - I would be surprised if they did not usher in a wave of closing bull market at the end. But once their era comes to an end, the US stock market is likely to experience a deep bear market before a new dominant force emerges," Peta said. Yardeni's attitude towards the AI investment frenzy is more pessimistic, as he believes this "aesthetic fatigue" began at the end of October last year - when the fund manager Michael Burry, who rose to fame in "The Big Short", issued a cryptic warning, followed by his negative bets on NVIDIA Corporation and Palantir. Other institutions have also issued warnings that the dominance of tech giants may soon come to an end. In their market outlook for 2026, Wall Street strategists at Goldman Sachs Group, Inc. have a core observation that the heyday of the Big Seven is coming to an end. The Goldman Sachs Group, Inc. strategist team stated last month that they expect the Big Seven's contribution to the earnings growth of the S&P 500 index in 2026 to drop to 46%, below 50% in 2025; at the same time, the earnings growth of the other 493 constituent stocks of the S&P 500 is expected to increase from 7% in 2025 to 9% in 2026. The other 493 component stocks of the S&P 500 are also attractive to value investors. Lead by Ben Snider, the strategist team at Goldman Sachs Group, Inc. pointed out that there is a significant divergence in market valuations currently, coupled with positive macroeconomic prospects, providing support for value stocks. "In terms of sectors, the healthcare sector is currently at historically low valuations compared to its earnings ability, further reinforcing our recommendation to increase holdings in this sector. In addition, we also recommend increasing holdings in raw materials, non-essential consumer goods, and software and service sectors," Snider wrote in a research report released on January 6.