Is this more catnip for the AI bears?

The number of "negative-beta" stocks in the S&P 500 is climbing.

Here's another factoid that could get the AI bears excited: Stocks in the S&P 500 are increasingly trading in opposite directions on a given day. That means volatility under the surface of the market is higher than the overall performance of the index would lead one to believe.

Over a rolling six-month stretch, the number of stocks trading with "negative beta" to the S&P 500 SPX recently touched the highest level going back to 1990, according to an analysis from Evercore ISI's Julian Emanuel. The record arrived on July 31, when 121 S&P 500 stocks were trading with negative beta to the index. Emanuel's team discussed this development in a report shared with MarketWatch over the weekend.

For those closely following markets this year, the figure probably doesn't come as a surprise. Dispersion beneath the surface of the index has touched one of the highest levels in history in 2026, as investors have piled into hot AI-linked memory stocks and infrastructure names. That meant big gains for Micron $(MU)$, Sandisk $(SNDK)$, Caterpillar $(CAT)$ and others. But it also saw many laggards fall by the wayside - while shares of once-hot software stocks got crushed.

Emanuel and his team initially highlighted this trend in a June research report that they had shared with MarketWatch.

"What the chart is trying to say is completely different in the eye of every beholder," Emanuel told MarketWatch at the time. "The people who are bearish want to look at it and see that it says that we're about to have a bubble pop."

Emanuel acknowledged that this reaction isn't totally unreasonable, given the history. Prior to this latest episode, the last time the number of negative-beta stocks peaked was in early 2001, as the dot-com bubble was deflating.

But Emanuel sees things differently. Rather than serving as a warning that the wheels are coming off the AI trade, the strategist said the figure is merely a reminder of how the market is increasingly diversifying into two camps: AI stocks and non-AI stocks. Since the bull market began, many Wall Street professionals have warned that the S&P 500 has become dangerously dependent on the AI theme.

But according to Emanuel, this chart should help to address those concerns. It shows that there is still plenty of diversification to be had within the S&P 500. In a sense, it is a sign that investors have learned an important lesson since the dot-com collapse: Don't put all of your eggs in one basket, or theme.

"In a world where every other asset has become correlated to AI in ways that investors may not fully appreciate, it is harder to diversify," Emanuel said. "But there's also this other universe of stocks that, day in and day out, provide an element of portfolio diversification because they move inversely to the index."

In this latest report, Emanuel maintained his generally optimistic outlook for U.S. stocks, saying it is possible the S&P 500 could hit 9,000 within the next 12 months. By comparison, the index finished at 7,745 on Monday, FactSet data showed.

The table below shows the 10 largest companies in the S&P 500 whose shares are trading with negative beta to the index, according to data provided by Evercore.

 
Company                           Ticker  Sector                   Market Cap ($B)  Price ($)  Beta (%) 
Walmart Inc.                      WMT     Consumer staples         917.3            $115.27    -0.10% 
Exxonmobil Holdings Corporation   XOM     Energy                   663.5            $160.10    -0.80% 
Johnson & Johnson                 JNJ     Healthcare               627.4            $260.35    -0.30% 
AbbVie, Inc.                      ABBV    Healthcare               440.8            $249.46    -0.10% 
Costco Wholesale Corporation      COST    Consumer staples         426.2            $961.06    -0.30% 
Chevron Corporation               CVX     Energy                   395.2            $200.00    -0.80% 
Coca-Cola Company                 KO      Consumer staples         377.4            $87.71     -0.20% 
Philip Morris International Inc.  PM      Consumer staples         296.7            $190.39    -0.10% 
Verizon Communications Inc.       VZ      Communications services  201.4            $48.48     -0.50% 
T-Mobile US, Inc.                 TMUS    Communications services  195.9            $182.61    -0.50% 

What is 'beta'?

"Beta" is a technical term used by portfolio managers and academics in the field of finance. It is intended to measure how sensitive an individual stock is to fluctuations in the broader market. Analysts use statistical techniques like linear regression to help tease this out.

A beta above 1 means an individual stock tends to see bigger swings than the broader market. For example, a stock with a beta of 1.5 would be expected to rise 15% if the broader market is up 10%. A stock with negative beta, on the other hand, would tend to move in the opposite direction of the broader market.

-Joseph Adinolfi