Stock Pickers Burned by AI Boom Hope Their Moment Has Arrived
Active managers trail the S&P 500 after underweighting AI stocks, but some expect pressure on the richly valued segment to build as borrowing costs rise.
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what happened
According to the Wall Street Journal, fund managers skeptical of AI stocks are lagging the S&P 500 notably this year. The Vanguard Dividend Growth Fund is up 55% over four years, while the index returned 126% over the same period. CoreWeave shares fell about 25% last week, and companies with weaker balance sheets are drawing closer scrutiny from investors.
Analysis by Morningstar shows active managers in the large-blend category started the year more than 8 percentage points underweight AI stocks. As a result, 70% of active stock mutual funds and ETF managers trailed their benchmarks through October 8. Several managers stress they are not against AI, but see cheaper opportunities elsewhere.
why it matters
For the market this signals a shift in sentiment: AI stocks still drive index performance, and higher borrowing costs could add pressure on the most indebted companies in the sector.
market impact
AI and cloud stocks: rising borrowing costs and doubts over data-center build-out pressure the segment
tags
instruments
sources
- Stock Pickers Burned by the AI Boom Think Their Moment Has Finally Arrived — WSJ, 20 October 2026 at 02:00 UTC
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