Swiss blue chips lead euro-area peers by almost 8 percentage points in October, the widest gap since March 2020.

The Swiss Market Index (SMI) is up 4.6% this month, and the Euro Stoxx 50 is down 3.2%. Bloomberg linked the gap to 3 forces pushing investors to cut risk in Europe.

Rising borrowing costs
Growing doubts about the AI trade
Political turmoil in France and Spain

3 Giants Carry the Swiss Lead

Investors in Europe have favored profitable companies with strong balance sheets, which are less exposed to rising borrowing costs. Bloomberg named the SMI one of the biggest beneficiaries of that shift, and its 3 largest companies produced the entire October gain.

Drugmaker Roche has climbed 12% in October, and rival Novartis has added 6.7%. Food group Nestlé has gained 10%.

Together, the 3 make up almost half the SMI’s value. Buying the index today is largely a bet on those 3 stocks.

SMI vs Euro Stoxx 50 Performance in October 2026. Source: TradingView

Their run coincided with a global selloff in AI shares. CNBC said 20 of the top AI and chip stocks shed over $1 trillion from October 12 to 15.

Investors worried that higher borrowing costs could weigh on AI spending. Global corporate bond spreads have since widened to their highest since May 2025.

Damian Burkhardt of EFG Asset Management tied the Swiss gains to that retreat from AI.

“Investors like the defensiveness of Swiss stocks and are actively looking for alternatives to the crowded AI trades. Healthcare was the funding sector for the AI trade, and that is reversing now,” he said.

Bank of America’s global fund manager survey shows how crowded that trade was before the selloff.

Managers polled from October 2 to 8 held their largest tech allocation since August 2020. BofA’s separate European survey ranked Switzerland joint second at a net 16%, behind Spain’s net 28%.

The rally has also made Swiss shares pricier, which raises the question of how far it can run.

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