The Stock Market Is Suffering an AI Hangover. What to Do Now

Tech stocksare tumbling, and thats OKas long as you remember that theres more to the market than artificial intelligence.

On the surface, the stock market looks like its suffering from one of its periodicrun-of-the-mill pullbacks. TheDow Jones Industrial AverageandSP 500have fallen only 0.8% and 0.9%, respectively, this week, while theNasdaq Compositehas dropped 1.1%and all three remain near record highs.
Zoom in, however, and the damage is worse than the headline numbers suggest. TheRoundhill Magnificent Sevenexchange-traded fund is off about 1.5%, withAmazon.com,Alphabet, andMeta Platformsin particular taking it on the chin. The drops formore speculative AI favoriteshave been even sharper. Nuclear energy companyOklo, which isnt expected to turn a profit this year or in 2026, has slumped more than 10% this week.Oracle,whose stock surgedafter it signed a big deal with OpenAI earlier this month, has dropped 5%. And memory-chip makerMicron Technologyhas declined 4%.

The pullback is a sign that investors might want to considerbroadening their portfoliosbeyond the frothiest AI plays. Its a tricky time for stocks, says Katy Kaminski, chief research strategist at AlphaSimplex. There is definitely a concern about hype.

The only problem: The U.S. market is heavily tiltedtoward Big Tech. To escape its gravitational pull, Edison Byzyka, chief investment officer at Credent Wealth Management, thinks that investors should be looking at the equal-weighted SP 500, which has lagged behind the broader market this year, over the main index. TheInvesco SP 500 Equal WeightETF trades for only about 16.5 times 2026 profit forecasts, below the SP 500s 22 times.

With valuations for megacaps this high, investors need to ask where they want to be over the next 12 months, Byzyka toldBarrons. He added that industrials and healthcare stocks look particularly attractive.Yet AI is more than Big Tech. Its been the undeniable theme on Wall Street, and has seeped into the shares of industrials likeAmphenolandVertiv, utilities likeConstellation EnergyandVistra, and gas pipelines likeWilliams, all of which have rallied this year. A better bet might be to look overseas, says Ron Albahary, chief investment officer at wealth-management firm LNW, who is nervous about U.S. stocks getting too frothy.

You have to question if this bull market is getting extended, he says. An American bias has worked for the past few years, but non-U.S. stocks have been doing well for the past few months or so. Thats somewhat due to the weakening dollar but also because of better valuations. You want to see that rotation.

AlphaSimplexs Kaminski recommends looking to Europe, Australasia, and Far East, or EAFE, markets, noting that international stocks are interesting for the first time in a long time as earnings growth starts to pick up. Theyre still fairly cheap too, with theiShares MSCI EAFEETF trading for less than 15 times earnings estimates for 2026.

Theres more to the market than AIand its time to wake up to that fact.