Investors are losing confidence that AI-linked stocks can keep delivering, and capital is moving. Three distinct non-AI trades are picking up speed, each targeting a different corner of the market.
Convenience stores catch a bid
The most visible rotation has landed in an unlikely place. Convenience store stocks have surged to near-record levels as investors hunt for defensive plays.
Casey's General Stores is up more than 54% this year, on pace for its best annual performance in 35 years. Alimentation Couche-Tard and Murphy USA have also risen in double digits.
The Iran conflict has been a direct tailwind. Energy markets have been volatile since the US attacked Iran and the Strait of Hormuz closed.
Fuel margin volatility tends to benefit operators who can buy opportunistically while keeping pump prices elevated, according to William Blair analyst Phillip Blee.
Beyond fuel, nicotine pouches, prepared foods, and beverages are driving inside-store sales growth. JPMorgan analyst Thomas Palmer flagged those categories as key revenue drivers across the cohort.
Murphy's CEO Mindy West noted a continued resurgence in the cigarette category alongside nicotine pouches as growth levers for the back half of this year.
The investment community is paying attention. The Roundhill HALO ETF focuses on high-asset, low-obsolescence stocks as a way to diversify away from the AI trade.
A new IPO from Yesway was 10 times oversubscribed, and Cumberland Farms has filed for a US IPO targeting a valuation of roughly $9B.
Analysts are cautious about what happens when geopolitical tensions ease. RBC analyst Irene Nattel says investors will shift focus to same-store sales and gas-margin sustainability.
Melius Research's Jacob Aiken-Phillips warned that some operators could see EBITDA decline in 2027, though he argues this cycle has structurally raised the profit floor.
Hard assets tied to AI buildout
A second trade targets physical infrastructure, not the chipmakers or hyperscalers, but the companies that supply the raw materials and construction services the AI economy requires.
Fund manager Bob Robotti of Robotti & Company Advisors argues that well-known AI stocks now embed decades of flawless execution in their valuations, while the physical economy supporting AI remains largely ignored. His firm manages roughly $1.1B.
Robotti favors Finning International, the world's largest dealer of Caterpillar equipment by volume. The company services lithium and copper miners in South America, materials in high demand during the AI buildout. Dealers generate higher profit margins on repair and maintenance than equipment manufacturers do on new sales.
He also favors Subsea 7, an offshore oil engineering and construction firm. Offshore extraction carries lower per-barrel costs than onshore fracking, and offshore wells recover 40 to 50% of embedded oil compared to roughly 10% for shale.
Subsea 7 is set to merge with Saipem before year-end, forming a combined entity called Saipem7.
Builders FirstSource rounds out Robotti's picks. The company supplies structural materials to large US homebuilders and has declined 29% this year as higher mortgage rates weigh on housing. Robotti sees that weakness as a setup for when the housing market recovers.
Goldman's themes beyond chips
Goldman Sachs identified three non-AI investment themes it says have limited correlation to AI momentum. The first is consumer experience, travel, entertainment, and leisure companies that benefit from sustained physical spending.
The basket includes hotel operators Marriott, Hilton, and Hyatt, cruise lines Royal Caribbean and Carnival, and fitness operator Planet Fitness.
Goldman notes the group has outperformed the equal-weight consumer discretionary sector this year while still trading below long-term average valuations.
The second theme is compounders a.k.a. companies with strong earnings growth, high returns on capital, and clean balance sheets that have lagged the broader market despite solid fundamentals.
Goldman cites Visa, Mastercard, Booking Holdings, MSCI, and On Holding as examples trading near decade-low relative valuations.
The third is potential M&A candidates. US deal activity has reached $1.2T so far this year, up 32% from the prior year.
Goldman flags Okta, Nutanix, HubSpot, SentinelOne, Freeport-McMoRan, ConocoPhillips, and Occidental Petroleum as names whose valuations haven't yet reflected the pickup in merger activity.
Morningstar's analysis adds another dimension. The firm reviewed moat ratings on roughly 130 companies potentially at risk from AI disruption.
It downgraded 40 economic moats concentrated in enterprise software, IT services, and payroll, while upgrading two cybersecurity firms. The takeaway is that software faces the most structural pressure, which reinforces why capital is looking elsewhere.
