Investors Rotate Out of Tech Amid 'AI Scare Trade'; Energy, Industrials Gain

Investors are shifting capital from technology and megacap stocks into energy and industrials, driven by an "AI scare trade" disrupting software valuations. As of February 22, 2026, the Tech-Software Sector ETF (IGV) has fallen 23% year-to-date, while the Energy Select Sector SPDR Fund (XLE) rose 22% over the same period. Truist CIO Keith Lerner noted the rotation away from giants like Microsoft (MSFT) and Tesla (TSLA) toward previously lagging sectors. Materials (XLB) and Industrials (XLI) gained 14% to 15% on AI infrastructure demand. Cybersecurity stocks sold off on February 21, with CrowdStrike (CRWD) dropping 5% after Anthropic announced a new security tool. UBS strategists project the S&P 500 (^GSPC) could reach 7,700 by year-end, citing broadening profit growth.