Healthcare steps into the lead
In a quick turn from laggard to leader, healthcare has rallied about 23% since April 30 - enough to beat the broader market and all other sectors, including high-growth tech and strong energy names tied to the Iran War trade. The charge has been led by Eli Lilly, AbbVie and Johnson & Johnson.
Money has followed performance. On a 65-day lookback through Oct. 19, Baird Strategas tallied roughly $4 billion flowing into healthcare ETFs, while tech funds bled about $6 billion - the largest outflow of any sector in that window. Until roughly six months ago, healthcare had been trailing the index by a wide margin, which Matt Orton at Raymond James Investment Management said left the group looking cheaper and a perceived place to stash cash for safety.
Why AI jitters are sending cash to clinics
With enthusiasm around artificial intelligence under strain, healthcare is being framed as the anti-AI trade. Orton said exactly that, noting the group has tended to rise when stocks tied to AI spending face bouts of "angst."
The split sharpened when CoreWeave, a cloud services firm, tumbled as its debt traded at distress-like levels. Even as healthcare extended its weekly winning run, tech stocks suffered a weekly decline unmatched since April 2025, when President Donald Trump rolled out his tariff initiative. Investors were "derisking their portfolios," said Brian Mulberry of Zacks Investment Management, adding, "The nervous money that was scared of AI is moving back into healthcare."
The strategist read: value, earnings and politics
Orton also pointed to price tags and positioning: "So, from a valuation perspective it's more attractive," he said. "I think a lot of investors have viewed it as a place to go for safety." With earnings due from big names like Lilly, he added, "If they do deliver, I think there's scope for healthcare to keep running just because it's been such an underinvested part of the market with all of the enthusiasm around artificial intelligence."
State Street Investment Management's Michael Arone cited company results and a better setup for 2027 as tailwinds, arguing investors are rebalancing away from heavy AI concentration rather than swapping tech entirely for healthcare. Politics are in the mix as well ahead of the US midterms. Morgan Stanley's Erin Wright said healthcare is seen as having "perceived relative insulation" from regulatory noise. RBC Capital Markets, in a noteworthy move earlier this month, shifted its stance by raising healthcare to overweight while trimming technology to market weight.
Savvy investors steadily seek new tools that can sharpen their decision making. We're hosting our first ever investor livestream on 11/17 to show you how to use ChatGPT and Claude to invest like a pro, hosted by Briefs Finance CEO Jaspreet Singh. Save your seat.
Wells Fargo's Ohsung Kwon expects the baton to move from chipmakers: "I don't think the leader is going to be semis, so there are going to be areas where they see the benefit flowing out of semis, which is the biggest sector in the S&P right now," he said. "I still think a lot of that money is going to flow into other tech areas and healthcare."
What could go wrong - and what it means for your portfolio
It is not a straight line. Johnson & Johnson's results earlier this month fell short of what the market wanted, pulling the group to its weakest week in over a month. Then Moderna dropped 18% on a Thursday after complete data from a study of its much-watched personalized melanoma vaccine with Merck leaked, and the healthcare index slipped 1.1% on Friday - a day after setting an all-time closing high.
The bottom line: flows, a less AI-centric tilt, earnings hopes and election math are pushing capital toward healthcare, but headlines still bite. For your portfolio, the tradeoff is clear - perceived safety and improving outlooks on one side, and event risk from quarterly numbers and clinical readouts on the other.
Small advantages from better information often compound into meaningful gains over time. On 11/17, our CEO Jaspreet Singh goes live for our first ever investor livestream on how to use ChatGPT and Claude to invest like a pro. Register to join him.
