While growth-heavy tech has been hammered, several sectors have shown relative strength or even gains.
Below, we highlight key stocks that are quietly staging a rotation-fueled rally.
The tech sector has been enduring a brutal selloff, with software stocks and AI-related companies leading the decline. Major indices like the have suffered their worst three-day rout since the ‘Liberation Day’ selloff of April 2025, shedding hundreds of billions in market value.
S1ource: Investing.com
The software and services index alone has lost nearly $1 trillion since late January, with names like Salesforce (NYSE:), Palantir (NASDAQ:), Adobe (NASDAQ:), ServiceNow (NYSE:), and Microsoft (NASDAQ:) down sharply.
Even broader tech giants aren’t immune: Netflix (NASDAQ:) is off 34%, Meta Platforms (NASDAQ:) 22%, and Tesla (NASDAQ:) 12% from recent highs.
Concerns over massive AI capital expenditures, such as Amazon’s (NASDAQ:) projected $200 billion spend, coupled with weak economic data like rising and slowing job openings, have exacerbated the downturn.
This risk-off sentiment has spilled into cryptocurrencies and commodities, with dipping below $65,000 and silver plunging up to 17% in a session.
Source: Investing.com
Yet, amid the chaos, not all corners of the market are crumbling. Investors are rotating into more defensive and value-oriented areas, seeking stability in sectors less exposed to AI hype and high valuations. Here’s a look at the pockets holding firm and opportunities worth considering for those looking to weather the storm.
Pockets of Resilience: Sectors and Stocks Worth Buying
For investors seeking refuge, focus on undervalued, dividend-rich areas with strong fundamentals. Diversification across these sectors can mitigate tech volatility.
1. Healthcare
A top pick for stability, with 59% Buy ratings among analysts. Demand for innovative treatments remains robust.
Eli Lilly (NYSE:): Up on obesity drug momentum, with implied 27% analyst upside.
Its diversified pharma portfolio weathers economic slowdowns better than pure tech.
Source: InvestingPro
Colgate-Palmolive (NYSE:): An undervalued core holding, offering defensive consumer staples exposure with steady dividends.
2. Energy
Leading the charge with 65% Buy ratings, fuelled by geopolitical worries in the Middle East and real asset appeal.
Constellation Energy Corp (NASDAQ:): A nuclear play benefiting from clean energy shifts. Analysts see hypergrowth potential and 62.8% potential upside.
Source: Investing.com
BWX Technologies (NYSE:): Another nuclear-focused stock with strong upside in sustainable energy.
3. Financials
Despite minor dips, 57% Buy ratings and recent earnings beats make this a value haven.
JPMorgan Chase (NYSE:): Implied 14.6% fair value upside amid resilient banking operations and interest rate tailwinds.
Source: InvestingPro
Berkshire Hathaway: A diversified conglomerate with insurance and industrials exposure, ideal for long-term hiding.
4. Materials and Industrials
Materials boast 60% Buy ratings, with industrials following suit for cyclical recovery.
FedEx (NYSE:): Undervalued logistics play with e-commerce resilience.
Source: Investing.com
Huntington Ingalls Industries (NYSE:): Defense-focused industrial holding steady amid global tensions.
Bottom Line
These selections emphasize quality over hype, with many trading at discounts to historical valuations. As the tech rout deepens, positioning in these areas could provide a buffer.
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At the time of writing, I am long on the S&P 500, and the Nasdaq 100 via the SPDR® S&P 500 ETF, and the Invesco QQQ Trust ETF. I am also long on the Technology Select Sector SPDR ETF. I regularly rebalance my portfolio of individual stocks and ETFs based on ongoing risk assessment of both the macroeconomic environment and companies’ financials.
The views discussed in this article are solely the opinion of the author and should not be taken as investment advice.
Follow Jesse Cohen on X/Twitter @JesseCohenInv for more stock market analysis and insight.
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