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Some investors have shifted toward value, cyclical sectors and non-U.S. markets, but 2026 data does not show a universal retreat from technology. E*TRADE clients sold technology shares in September, while institutions tracked by S&P Global Market Intelligence increased their IT holdings in August. The apparent market rotation depends on whose activity is measured, when, and which part of technology is meant.
Is the market moving away from technology?
There is evidence of broader market leadership, not a clear-cut technology exodus. In its March 2026 review of developments through early 2026, the Bank for International Settlements (BIS) described a U.S. shift away from high-momentum technology and the Magnificent Seven toward value and cyclical sectors. It also noted stronger equity gains in Europe and Japan and diversification flows away from U.S. stocks.
More recent activity points in different directions. E*TRADE from Morgan Stanley reported that its clients were net sellers of technology in September. By contrast, S&P Global Market Intelligence reported that institutions increased IT holdings in August and were net buyers in IT. These reports cover different investor groups and months, so they are not contradictory measurements of the same trade. Together, they make a blanket claim that investors are abandoning tech too broad.
What do the recent flow figures actually measure?
The figures below describe different samples and measures. E*TRADE reports client net-buying and net-selling activity; S&P Global Market Intelligence reports institutional equity flows and changes in holdings. Neither set of percentages is a sector’s investment return.
#1 Best Overall
| Source and period | Reported activity | What it indicates |
|---|---|---|
| E*TRADE from Morgan Stanley, September 2026 client activity, updated October 1, 2026 | Most net buying: real estate +11.76%, consumer discretionary +5.17%, industrials +4.67%. Most net selling: technology −1.62%, communication services −1.52%, health care −0.89%. | Activity among E*TRADE clients in the study of specified U.S.-traded stocks, ADRs, dividends and options—not sector performance or all investors’ trades. |
| S&P Global Market Intelligence, institutional activity in August 2026 | Institutions sold a net $22.86 billion in U.S. equities, after net buying $5.14 billion in July. August net selling was about half the reported 12-month average of $46.34 billion. | Broad institutional U.S.-equity flows; not a measure of every institution or household investor. |
| S&P Global Market Intelligence, institutional holdings in August 2026 | Institutional IT holdings increased nearly 0.8%, compared with a 0.5% increase in July. | A holdings change in the IT sector alongside broad net U.S.-equity selling; it does not mean all technology-related industries or investors behaved alike. |
The distinction matters: a group can sell U.S. equities overall while adding to a particular sector. In its September 16 report, S&P Global Market Intelligence quoted senior research analyst Julian van Rensburg saying IT and real estate “appear to be of particular interest to the institutional group currently.” That observation refers to institutional preferences in the report, not a consensus among all investors.
Why might leadership be broadening?
Several explanations appear in market commentary, but they are interpretations of the environment rather than proof of a single cause for the reported flows.
Rank #2
Valuations and market concentration
In its March 19, 2026 article, “The great rotation: When valuations matter again,” Vanguard described the S&P 500 as near the upper end of its historical valuation range and argued that stretched valuations can make shares more vulnerable when expectations about a business change. Vanguard also cautioned that valuation is not a timing tool: an expensive market can keep rising, and valuation alone does not establish when a rotation will happen.
AI demand reaches beyond software
AI investment can support demand for semiconductors and technology equipment, but also for data centers, electricity, cooling, connectivity, construction and other physical infrastructure. At the same time, concerns about AI-driven disruption have weighed on some software and IT-services businesses. As a result, reduced enthusiasm for some technology companies can coexist with investment in the infrastructure that enables AI.
T. Rowe Price’s June 10, 2026 midyear outlook framed AI as a broader industrial and infrastructure cycle. Sector portfolio manager Jason Adams said: “AI is no longer just a technology story. It is increasingly becoming a broader industrial and infrastructure investment cycle.” His investment view emphasizes companies able to monetize power, connectivity and execution, rather than assuming that all firms associated with AI will benefit equally.
Cyclical industries and capital-intensive investment
The BIS review described leadership from banks, energy, industrials, consumer staples and materials in its review of U.S. sector performance, alongside a growth-to-value shift. Vanguard and T. Rowe Price have also connected infrastructure, energy security, manufacturing and supply-chain investment with potential demand for capital-intensive industries. These themes can broaden market leadership without meaning that technology has stopped mattering.
Regional diversification and macro uncertainty
The BIS noted stronger gains in European and Japanese equities and flows diversifying away from U.S. stocks. Vanguard observed that many non-U.S. markets had comparatively attractive valuations before the 2025 rally, while warning that valuation gaps had since narrowed. T. Rowe Price’s midyear outlook also pointed to manufacturing recovery, supply shocks, energy security and geopolitical fragmentation as relevant themes. Those outlooks provide context, not a settled explanation for every market move in October 2026.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How should you assess claims about a “rotation”?
Before treating a headline about investors moving away from tech as a portfolio signal, check what the reported data actually covers:
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- Investor group: Brokerage clients, institutions and funds are not interchangeable samples. A single firm’s client activity does not represent all investors.
- Dates: Monthly trading, holdings changes, longer-term market reviews and year-to-date performance describe different windows. August institutional data and September E*TRADE activity should not be combined as if they cover one period.
- Measure: Net buying or selling, a change in holdings, net flows and price performance answer different questions. A sector’s trading activity is not its return.
- Sector definition: Technology, IT, software, IT services and communication services are distinct categories. Mega-cap growth stocks can move differently from other technology businesses.
- Geography and concentration: A shift away from a handful of U.S. mega-caps is not the same as selling all U.S. shares or all technology exposure. Global diversification is a separate dimension.
- Investment case: Consider earnings expectations, valuation, business durability and the returns companies may generate from capital spending. A reported rotation does not prove a sector is cheap or will outperform.
Kiplinger reported on October 1, 2026, that the S&P 500 Momentum Index had fallen 9% from its late-June peak. That figure offers one measure of a momentum-oriented index’s decline over that interval; it is not an official broad-market measure of investors’ technology sales and does not establish what happens next.
What does the shift mean for a personal portfolio?
Rotation headlines are not, on their own, a reason to make a sudden portfolio change. Vanguard’s analysis presents arguments both for the continued merits of a tech-heavy U.S. market and for broadening exposure; it does not make valuation a market-timing signal. Diversification can help avoid dependence on one sector, region or group of large companies, but it does not ensure a profit or protect against loss.
- Review whether your holdings are concentrated in a few companies or sectors, including through funds that may appear diversified.
- Compare your current allocation with your time horizon, risk tolerance and plan rather than reacting to one month of activity.
- If you are considering a change, assess the businesses and exposures you would add or remove, not just the headline category “tech.”
T. Rowe Price describes its outlook as general information rather than individualized or fiduciary advice and notes that investment values can fall as well as rise. Any allocation decision should reflect your own circumstances; the data cited here do not establish that a particular sector or region will outperform.
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