Today’s weekly market commentary looks again at Artificial Intelligence (AI) but this week through a different lens. As geopolitical concerns ease – though certainly still front and center – investors have seen the equity market recover from earlier losses and touch upon new all-time highs in 2026. As investors shift their focus – and their investments – back toward those companies participating in AI, today’s piece illustrates market growth is currently selective and not moving uniformly across all sectors. More specifically, in 2026, those businesses insulated from AI disruption or that directly benefit from AI Infrastructure spending are being rewarded.
The enclosed chart shows the 2026 year-to-date total return of the S&P 500 Index plus the returns for the subsectors of the S&P 500. Data shown is as of April 28, 2026. As can be seen, the Information Technology Services subsector has posted a -25% return. Professional services are down -21%, and software is down -15%. The S&P 500 Index itself has posted a 4% return, but importantly from a subsector perspective, Air Freight & Logistics is up 16%. Semiconductor Equipment is up 25%, Electronic Equipment is up 35%, and Construction & Engineering is up an astonishing 57%.
As the data shows and the piece explains, “the chart illustrates this divergence, with direct beneficiaries of AI capital spending on businesses largely insulated from its potentially disruptive effect posting strong year-to-date gains and outperforming the broader S&P 500 Index’s modest rise. In contrast, sub-industries viewed as most vulnerable to AI-driven disruption – including IT services, Professional Services, and Software – have materially underperformed.” – WFII Chart of the Week May 5,2026
And then finally, in terms of what this means for investors, the author explains, “as geopolitical risks around Iran have eased, investor attention has returned to secular growth trends with strong fundamentals. In early April, we believed that much of the geopolitical risk premium had been priced into oil and we downgraded the Energy sector. Meanwhile, more attractive valuations, durable fundamentals, and renewed confidence in AI-driven growth led us to upgrade the Information Technology sector.” – WFII Chart of the Week May 5,2026
We would ask that you review the attached piece at your convenience and please let us know if you have any questions or if you would like to discuss it further. And as we always end this correspondence, please remember that regardless of current momentum and regardless of the key takeaways in this weekly perspective, we will continue to monitor and manage with a thoughtful approach based on your specific long-term objectives. Thank you for your continued confidence and look forward to speaking soon.
