Why Smart Investors Are Moving Beyond Big Tech to Find the Next Bull Market

2026-10-18 economy

New York, Monday, 19 October 2026.
Investors are pivoting from costly artificial intelligence infrastructure stocks toward traditional companies that use AI to cut costs, unlocking significant growth across underappreciated stock market sectors.

Shifting Focus to the Unmagnificent 493

Thomas Hayes, founder and managing member of Great Hill Capital, predicts a “monstrous bull market” will develop beneath the surface of the S&P 500 index within the next six months [1]. Hayes suggests that macro investors focused on the recent sell-off in artificial intelligence equities are missing a broader bull market taking shape in undervalued sectors [1]. He identifies the “unmagnificent 493” as the primary investment opportunity, shifting focus away from mega-cap AI infrastructure firms toward companies utilizing AI to reduce costs and improve profit margins [1]. Hayes argues that firms adopting existing AI models to automate tasks like customer service and inventory management will outperform those building the original infrastructure [1]. He stated, “Those companies that are adopting AI… will absolutely gallop” [1]. This projection indicates a market expansion heading into late 2026 and early 2027, specifically targeting a timeline by April 2027 [1].

Sector Rotation and Strategic Targets

Hayes is pivoting investments away from the semiconductor trade, citing crowded positions and rising capital expenditures [1]. Instead, he is targeting sectors including natural gas, logistics, telecommunications infrastructure, and defensive sectors [1]. Specific equities highlighted in this rotation include Comstock Resources (CRK), GXO Logistics (GXO), Crown Castle (CCI), and Alibaba (BABA) for exposure to Asian AI markets [1][3]. Market data on October 15 and October 16, 2026, showed a shift away from AI-heavy tech stocks, with healthcare, utilities, and energy sectors outperforming while tech and communication-services declined [1]. Hayes confirmed these views in a MarketWatch article published on October 15, 2026, which was subsequently shared across LinkedIn and Instagram [3][4][5]. His framework involves specific filters for stock selection, as discussed in his weekly podcast updates [2].

Economic Context and Yield Pressures

The 10-year U.S. Treasury yield is currently at approximately 5.3%, creating competitive pressure for investors to demand tangible cash flow results from companies with high AI-related valuations [1]. Investors are shifting focus from companies building AI infrastructure to identifying firms that will most effectively utilize AI technology [1]. Reuters reported on October 16, 2026, that investors are focusing on upcoming earnings reports from Meta Platforms (META), Tesla (TSLA), and major semiconductor firms to determine if AI returns justify current capital expenditure levels [1]. Hayes projects a broadening market where healthcare, industrials, consumer staples, utilities, and financials gain traction, reducing reliance on a small group of mega-cap technology firms within the S&P 500 [1]. This market-cap-weighted scenario allows hundreds of equities to climb even if trillion-dollar firms stagnate [1].

Discipline in Compounding and Leverage

Hayes emphasizes the importance of not interrupting the magic of compounding through permanent capital impairment [6]. He advises investors to apply discipline similar to private business acquisitions, questioning revenue and profit multiples before committing capital [6]. Hayes warns against the use of leverage, citing Charlie Munger’s advice on the killers of investment success: ladies, liquor, and leverage [6]. His recent media appearances include a discussion on Fox Business’ Varney & Co. on October 12, 2026, and various episodes of his Hedge Fund Tips VideoCast/Podcast series throughout September and October 2026 [7]. These appearances reinforce his stance on avoiding unnecessary capital interruption and focusing on value over price [6][7].

Sources

Bull Market Equity Rotation