S&P 500 Gains 18.3% as Ex-AI Index Rises 6.7%

In six months, the S&P 500 advanced 18.3%, while Goldman Sachs’ index that strips out AI enablers rose 6.7%. A chip-centric AI surge drove the benchmark to a record, while the ex-AI index stands 6.4% below its peak.

Both the S&P 500 and the Nasdaq Composite reached record closing levels on Tuesday. In contrast, Goldman’s ex-AI index hit its high in August.

At what point did the S&P 500 and its ex-AI index diverge?

The S&P 500 climbed 18.3% over six months to 7,818.93 at Tuesday’s close, according to Google Finance. The ex-AI index (ticker SPXXAI) rose 6.7% to 3,123.24. The spread is 11.6 percentage points.

Goldman developed the index in February to enable clients to hedge AI exposure, as reported by Axios. It excludes stocks the bank identifies as AI enablers, roughly 45% of the S&P 500 at its creation.

The ex-AI index is 6.4% below its 52-week high of 3,337.19. Meanwhile, the S&P 500 is 0.3% below its own high.

Chip stocks provided the most recent boost. CNBC reports that AMD, Marvell, Synopsys, and Cadence Design Systems each advanced 20% or more over about 20 trading days.

Still, Kevin Gordon of Schwab has noted that the average stock fell 14% from its peak to its trough since early August.

Could power stocks form the next leg of the AI trade?

Jan van Eck, CEO of asset manager VanEck, said chips represented the initial phase of the AI trade. He describes power producers and nuclear energy as the second stage, calling it the AI 2.0 trade.

This group has trailed this year because of political concerns over data-center expansion, he said. On Tuesday, however, power producer Constellation Energy jumped 12.3% after Alphabet signed a power deal with it.

Van Eck said the deal might indicate a bottom for the group. But a prediction market he cited puts the odds of a single nuclear plant receiving approval below 10% this year.

“I think when that happens this dry spell for the AI 2.0 trade will be over.”

Jan van Eck, CEO of VanEck, speaking on CNBC.

The divergence implies that the benchmark’s records now rest on AI-linked stocks. Third-quarter results from the largest cloud spenders may indicate whether that support persists.