Pepperstone Group's Chris Weston says investors "are seeing a more sort of universal earnings breadth and that means a stock picker's market." He tells Bloomberg Television that people are also finding growth and opportunity outside of the Magnificent Seven group. ...

AI Upheaval Has Delivered a Stock Picker's Market. - Barron'sSkip to Main ContentThis copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.# AI Upheaval Has Delivered a Stock Picker's Market for the First Time in YearsBy [Martin Baccardax]ShareResize---ReprintsIt's a stock picker's ...

Market Dynamics - The S&P 500's flat year-to-date performance masks significant underlying changes, indicating a shift towards a stock picker's market where individual stocks and sectors are gaining importance [1] - The narrative around artificial intelligence (AI) has evolved from focusing on beneficiaries to identifying those at risk of disruption, affecting a broader range of industries beyond just software [2] Capital Rotation - A notable capital rotation is occurring, with investors reallocating from mega-cap technology stocks to value stocks, small caps, and international equities, amplifying market effects due to technology's significant weight in the S&P 500 [3] Earnings Growth - The S&P 493, which excludes the largest tech companies, is projected to see earnings growth of nearly 14% in 2026, indicating a broadening of growth opportunities beyond mega-cap stocks [4] Sector Performance - The Energy Select Sector SPDR Fund has experienced over 20% growth year-to-date, driven by record inflows, while industrials continue to show strength [5] Active Management - Active equity ETFs have seen a significant increase in flows, now accounting for approximately 32% of ETF flows, up from 6% in 2021, highlighting a shift towards active management in a less correlated market environment [6] Market Expectations - The CBOE S&P 500 Dispersion Index is at multi-month highs, while the CBOE Three-Month Implied Correlation Index is low, suggesting expectations for more idiosyncratic stock movements rather than synchronized market rallies [7] Investment Implications - The market is undergoing fragmentation and repricing, with shifts in AI narratives, rotation away from mega-cap stocks, and an improving macroeconomic backdrop, indicating that broad beta exposure may no longer suffice for investors [9]