Without its AI stocks, the S&P 500 has beaten the full index by 6.4 percentage points this October. Chipmakers slid on AI spending and financing worries, putting that lead on pace for a record month.That swing came one month after ex-AI stocks trailed by 5.1 points. AI-linked firms make up about 45% of the S&P 500, a weight that became a drag this month.

3 Weeks of Selling Built the Widest Gap on Record

Most of that lead built up over the past three weeks, when ex-AI stocks outperformed by 7.4 points. Bloomberg data shared by The Kobeissi Letter shows no wider three-week spread on record.

October’s margin also sits well above the previous monthly record of 3.6 points, set in July. Leadership has changed hands often, with ex-AI stocks winning 4 months of 2026 and the full index 6.

S&P 500 ex-AI vs. S&P 500 monthly return difference, 2022 to October 2026. Source: X/The Kobeissi Letter

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Worries over AI spending and rising financing costs began dragging AI stocks down this month. A hot inflation report on October 14 added to the pressure by reviving bets on another Fed rate hike. Higher rates would make debt-funded AI spending more expensive.

Chipmakers took the heaviest losses, with the Philadelphia Semiconductor Index falling for eight straight sessions. That marked its longest losing streak since 2008.

Money leaving chips moved into energy and consumer staples, which each gained double digits in October through October 22, CNBC data shows. That rotation briefly erased the gap AI stocks had built over 2026.

2 Tests Now Stand Before October Closes

The record still has three sessions to survive, and two events this week could decide it.

The first is the Federal Reserve’s rate decision today. Markets have already priced in a pause, with CME FedWatch showing about a 90% chance of a hold.

That shifts attention to what the Fed signals about December, when futures traders see roughly a 75% chance of another hike.

The second is Microsoft and Alphabet earnings this week. Meta shares fell more than 9% last week after the company reported its first negative free cash flow. Evercore analyst Mark Mahaney flagged that this week’s hyperscaler reports could lift capital spending by up to $100 billion.

The AI trade has already started recovering ahead of both events. The semiconductor index gained about 7% over three sessions through October 27.

July’s record lead turned into a 5.1-point deficit within two months. Whether October’s lead holds depends on whether this week eases doubts about AI spending or deepens them.

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