It's a small but interesting divergence, and one that supports something I've been predicting for a while now: a rotation away from speculative technology and AI-related investments and toward established businesses with more predictable earnings and cash flows.

I continue to believe tech, particularly the more speculative corners of the AI trade, is headed lower over the short to medium term. Yesterday's rally didn't change that view. As I discussed yesterday, citing Gordon Johnson, I think much of the move could be attributable to VIX compression and the unwinding of election-related hedges. Once the election uncertainty disappeared, investors no longer needed as much protection, implied volatility fell, and the resulting repositioning helped push stocks higher.

That doesn't mean there wasn't genuine buying, or that the market can't rally further. But I would be careful about mistaking a mechanical relief rally for a fundamental improvement in the outlook. Valuations remain stretched, financing costs remain a problem, and the economics of the AI infrastructure boom are increasingly difficult to justify. The election, in my opinion, added another layer of risk rather than removing one.

What interests me more than yesterday's index performance is where money appears to be moving to.

For a few months, I've been arguing that 2027 could be characterized by a rotation away from speculative AI and technology investments and toward larger, established companies with real earnings and durable businesses.

The relative action in some names I've pointed out, including Nike (NKE), Costco (COST) Microsoft (MSFT), Uber (UBER), Consumer Staples (VDC) and McDonald's (MCD), along with several other companies I've been watching, suggests that process may already be underway. Names like these are outperforming the NASDAQ and that outperformance appeared to accelerate during yesterday's rally.

These businesses have very different exposures, but they share an important characteristic: investors can evaluate them based on existing operations and identifiable earnings power, rather than exclusively on extraordinary assumptions about future growth.

Microsoft, for example, may face legitimate questions about its AI spending, but it has the financial resources to fund those ambitions without continually returning to capital markets.

Interestingly, JPMorgan's trading desk described a similar pattern yesterday. According to an X post by Zero Hedge, JPM's Brian Heavey noted a clear preference for large-cap quality, particularly companies with access to financing and ownership of computing infrastructure. The desk observed demand for hyperscalers like Amazon, Microsoft, and Alphabet, while second-tier AI infrastructure names like CoreWeave (CRWV) and Nebius (NBIS), which are more dependent on continued capital raising, showed weakness.