Big Tech Drags S&P 500 Rally as Investors Shift Focus to AI and Alternative Sectors

The S&P 500's 5% year-to-date gain masks a deeper divergence in market performance. Remove Apple, Alphabet, and Tesla from the equation, and the index would be up an additional two percentage points. These tech giants have become dead weight—Apple down 17%, Alphabet off 7%, and Tesla posting the worst declines among peers.

Apple's failure to deliver tangible AI products despite its "AI for the rest of us" campaign has eroded investor confidence. "Why pour money into Apple when they can't even blueprint their AI strategy?" asks Paul Marino of Themes ETFs. Meanwhile, Alphabet grapples with existential threats to its search ad dominance as AI chatbots reshape digital traffic flows.

This tech underperformance is accelerating a sector rotation. Capital flees stagnant giants for pure-play AI ventures and alternative asset classes—including cryptocurrencies that promise technological disruption without legacy baggage. The market's message is clear: innovate or become irrelevant.