London, 10 November 2026 — EBM Newsdesk Analysis — By Anthony Gill
In October, the MSCI global consumer staples index rose 10.6%, its strongest month since 1998, while global healthcare stocks gained 9.8%, their second-biggest monthly rise this century, the Financial Times reported. Over the same period, global technology stocks have fallen more than 13%. The surprising detail is who is winning. Since the Nasdaq 100 peaked on 6 October, Walmart has risen 15%, while Procter & Gamble and Coca-Cola have each gained about 10%. After three years of chasing AI, investors are paying up for toothpaste and soft drinks.
For Europe, the shift is a rare chance to look good. The region’s market is heavy with exactly the kind of steady companies investors now want, and light on the tech stocks they are selling. The Stoxx Europe 600 is up 1.5% so far in November, while the Nasdaq 100 is down more than 2%, according to the FT.
Why Investors Are Running for Cover
The doubts about AI have been building for months. Investors question whether the vast sums being spent on data centres will ever pay off, and whether the same few companies are simply passing money between themselves. Last week’s sharp sell-off, which hit SoftBank and Kioxia particularly hard, turned those doubts into action.
Join The European Business Briefing
New subscribers this quarter are entered into a draw to win a Rolex Submariner. Join 40,000+ founders, investors and executives who read EBM every day.
SubscribeThe big banks are now changing their advice. Citi has downgraded US and global technology stocks from overweight to neutral, pointing to rising credit spreads, weaker earnings forecasts and souring sentiment towards AI, according to Hedgeweek. Its strategists expect defensive stocks to keep beating more economically sensitive sectors into next year. Hedge funds are also cutting their exposure to tech.
The bond market tells a similar story. In mid-October, US Treasuries had their biggest one-day rally in at least a year, as investors sought safety, MarketWatch reported. Some fund managers think slower AI spending could also mean slower economic growth, which makes bonds and defensive shares more attractive.
The Defensive Trade Has Limits
Defensive stocks are not a free lunch. Many now trade on high valuations after their rally, and they offer little growth. With the Federal Reserve raising rates and bond yields high after the global bond sell-off, safe-looking shares also have to compete with the income investors can now earn from government debt.
Nor is the AI story over. US companies are still beating profit forecasts at a remarkable rate. Bulls argue that sell-offs have been buying opportunities many times in the past four years, and that this one may be no different.
The Call
I think this rotation has further to run, but not for the reason the bears give. AI is not finished. What has changed is that investors now want proof of profits, not promises. That favours companies that earn money from AI over those still spending heavily on it, as Google’s spending bill showed. Meanwhile, Europe’s unfashionable mix of food, drink, healthcare and banks is finally an advantage. Having lagged behind as Wall Street pulled ahead, European markets may find that being boring is, for once, the best strategy.
Related Analysis
