The stock trend for the month was not AI. Here’s what was climbed instead

AI wasn’t Wall Street’s obsession in November. It was health care.

The S&P 500 health care index is up 5% so far this month, easily outpacing the broader market, which is down more than 4%. Meanwhile, the technology sector is down more than 8% since the beginning of the month, making it the worst-performing sector on the S&P 500 during that time.

Pharmaceutical stocks posted the biggest gains in the healthcare sector. Regeneron Pharmaceuticals (REGN) was the best-performing stock in the S&P 500 over the past month, closely followed by Eli Lilly (LLY).

The latter’s shares have risen more than 20% this month, and on Friday, the maker of blockbuster weight-loss drugs Monjaro and Zybound briefly became the first healthcare company to be valued at $1 trillion. Its market capitalization currently falls in the region between Walmart (WMT) and Berkshire Hathaway (BRKA, BRKB).

Overall, the move is largely a reflection of investors’ search for the perception of safety in the stock market. Wall Street has been buzzing about artificial intelligence for the better part of three years, but that enthusiasm has waned in recent weeks as investors draw parallels between today’s AI boom and the dot-com bubble of the late 1990s.

These similarities — high valuations, huge investments in emerging technology, vendor financing deals — have given students of history pause. After all, it took the Nasdaq 15 years to recover after the dot-com bubble burst in 2000. Nearly half of professional money managers consider the AI ​​bubble to be the biggest market risk, according to a global fund managers survey conducted by Bank of America in November.

What technology stocks have lost in recent times, healthcare seems to have gained. Fund managers increased their allocations to health care stocks by 20 percentage points this month, more than any other asset class in the Bank of America survey. Investors have not been this bullish on the sector since December 2022.

Investors often favor health care when anxiety is high on Wall Street or Main Street. When times are tough, people can cut back on travel and entertainment and even give up some necessities, but they are unlikely to stop taking medications or seeing doctors. The healthcare imperative is one reason why traders view the sector as a defensive play.

As Wall Street prepares for healthcare, this trend may undoubtedly change. President Donald Trump has been an outspoken critic of the sector, railing against “money-sucking insurance companies” and vowing to “cut out the middleman,” referring to pharmacy benefit managers who negotiate drug prices with drug companies, insurers and pharmacies.

He also pushed pharmaceutical companies to lower drug prices on TrumpRx, and threatened to impose heavy tariffs on pharmaceutical products imported by companies without a US manufacturing presence.

Healthcare could also end up being the beneficiary of a short-term rotation. Most analysts were encouraged by Nvidia’s (NVDA) strong earnings report on Wednesday, which many expected to revive the AI ​​business. Investors have felt differently in recent days, but several tailwinds, including potential interest rate cuts, strong earnings growth, and benefits from this year’s “one big, nice bill,” could still attract cautious investors who have turned to safer stocks.