Core Insights - Wall Street is shifting focus from technology giants to traditional sectors like healthcare, industrials, and energy as 2026 approaches, driven by skepticism over tech stock valuations and AI investment returns [1][2] - Recent earnings reports from AI bellwethers like Oracle and Broadcom have heightened investor concerns, leading to a rotation towards lower-valued cyclical stocks and small-cap stocks [1][2] - Goldman Sachs predicts a 2.5% GDP growth for the U.S. in 2024, higher than the market consensus of 2.0%, suggesting further upside for cyclical sectors [1][4] Group 1 - The consensus among major Wall Street strategists is to reduce exposure to the "Tech Seven" and increase investments in traditional sectors [1][2] - The Russell 2000 small-cap index has risen 11% since November 20, while the "Tech Seven" index's gains were only half of that [1] - Piper Sandler's Craig Johnson notes a shift in investor behavior away from tech giants towards broader market opportunities [2] Group 2 - The market is already experiencing a rotation, with the S&P 500 equal-weight index outperforming its market-cap weighted counterpart [3] - Strategas Asset Management anticipates a significant rotation towards financials and consumer discretionary sectors in 2026 [3] - Bank of America highlights a "run-it-hot" strategy, indicating a shift from large-cap stocks to small and micro-cap stocks [3] Group 3 - Goldman Sachs emphasizes that the market has not fully priced in the potential economic acceleration expected in 2026 [4][5] - The report indicates that cyclical assets present opportunities due to the market's conservative pricing of economic growth [5] - Non-residential construction stocks are highlighted as having significant potential for recovery, supported by fiscal incentives and improving forward-looking indicators [6] Group 4 - The earnings growth for the "S&P 493" (excluding the Tech Seven) is projected to accelerate from 7% this year to 9% by 2026, while the Tech Seven's contribution to S&P 500 earnings is expected to decline from 50% to 46% [6] - If employment and inflation data remain stable, the "S&P 493" could see bullish trends next year [6]