Healthcare Outperforms Semiconductors by 30 Points as AI Trade Wobbles
The AI trade is wobbling — and healthcare stocks are cashing in on every stumble. During a volatile late-June stretch, the Health Care ETF outperformed the Semiconductor ETF by over 30 percentage points as quant funds rotated into defensive stocks. Portfolio managers surveyed by Deutsche Bank had healthcare allocations near the lowest levels since 2009, leaving room for fresh buying.
- SMH trades at 22–30x forward earnings versus XLV’s ~18x, leaving healthcare looking relatively cheap compared with semiconductors.
- XLV is up just ~6% this year versus the S&P 500’s 13% gain, putting healthcare near the low end of its 10-year relative range.
The winning picks: Goldman Sachs healthcare analyst Asad Haider warns that macro-driven sector swings are making stock picking harder. Bristol-Myers Squibb and Johnson & Johnson are both up 40%+ over the past year despite very different earnings outlooks. For investors looking past those sector-wide moves, Haider favors Eli Lilly, Vertex Pharmaceuticals, and McKesson. The rotation may open the door, but earnings still decide who stays.