How I Made $5000 in the Stock Market

AI’s Winners Aren’t All in Tech. 22 Cheaper Stocks to Consider.

Sep 30, 2025 14:49:00 -0400 by Jacob Sonenshine | #AI

Citigroup demonstrates how non-tech companies can benefit from AI. (Mario Tama/Getty Images)

Key Points

Investors can benefit from artificial intelligence without taking the risk of buying the highflying technology names.

That is good news because the S&P 500 tech sector looks a bit risky right now. The S&P 500 Information Technology Sector Index dipped 0.8% in the five trading days coming into Tuesday as buyers turned away, after having bid the index up more than twofold over the past five years. The index has become more expensive, and any disappointment in terms of the companies’ earnings could knock it lower.

Barron’s published a piece on Monday suggesting investors consider stocks that have been rising recently and whose movements aren’t correlated to the marquee AI names: Microsoft, Oracle, Amazon.com, Alphabet, Meta Platforms, Nvidia, Broadcom and the like. The idea is that if AI stocks falter, those shares are more likely to hold their ground. They could even keep rallying because those companies have already demonstrated satisfactory profit growth.

Another possibility is to look at a different group of stocks, one that is correlated to the AI trade, but that is outside of tech. These stocks could theoretically drop if Big Tech falls, but maybe not by as much. They could have more room to rise in the near term, given that they are far cheaper than tech stocks.

The AI-correlated stocks are found across industries, though many of them are in the financial sector. That is partly because financial companies are prime adopters of AI: As their AI spending increases, they need fewer staff in certain jobs, limiting their costs and boosting their profit margins.

Financials, in aggregate, are relatively cheap. The Financial Select Sector SPDR exchange-traded fund trades at 16.8 times the aggregate earnings per share that analysts expect for the coming 12 months. That leaves the ETF at a 41% discount to the S&P 500’s tech sector’s 28.5 times, compared with 37% on average over the past decade, according to Barron’s calculations using FactSet data.

The strategist Adam Parker, founder of Trivariate Research, came up with a list of non-tech names that tend to move in line with AI stocks. He screened for companies that have had a correlation of 80% or more with a basket of AI stocks over the past six months. Those include manufacturers Caterpillar , Eaton, Parker-Hannifin, Emerson Electric, Johnson Controls International, and Cummins; and consumer companies Marriott International, Viking Hotels, and Carnival.

The financials on the list were JPMorgan Chase, Goldman Sachs Group, Morgan Stanley, Citigroup , American Express, Capital One Financial, Blackstone, KKR, Apollo Global Management, PNC Financial, Ameriprise Financial, Ares Management, and Raymond James.

Citigroup illustrates the benefits of AI. It is using the technology to more quickly and accurately analyze markets, detect fraud, and reply to customers’ queries, among other items, which can save money by reducing staff in certain areas. Meanwhile, the consensus forecast on FactSet is that revenue will increase 3% next year to $87.4 billion as the bank’s wealth-management business continues to grow. Analysts expect Citigroup’s operating margin to rise to almost 40% from about 37% this year.

That could send per-share earnings up 29% next year, forecasts on FactSet indicate, but analysts expect growth beyond next year as investments in AI continue to boost the bank’s margins.

That kind of growth could easily boost the stock, which trades at 11 times earnings, a discount to the financial sector but in line with the S&P 500 banking industry.

Take a look at these names.

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com