Where Investors Aren’t Looking

Investor attention is overly concentrated on AI, creating overlooked opportunities in resilient consumer businesses and undervalued medical-device companies.

• The 10 largest S&P 500 constituents represented roughly 39% of the index as of September 30, 2026, while 37% of global fund managers were overweight technology and semiconductors were viewed as the most crowded trade.
• Consumer fundamentals remain broad: September card spending per household rose 6.2% year over year, or 5.1% excluding gas, and nearly 86% of discretionary retail categories recorded spending growth, the broadest result in more than five years.
• Labour and credit data reinforce the consumer case: job changers received wage gains of roughly 12.5%, lower-income households saw after-tax wage growth of 4.5% in September, and credit-card repayment rates remained at a record high while large-bank charge-offs declined year over year.
• Medical devices have lagged pharmaceuticals sharply, with pharmaceuticals rising about 41% and medical devices falling about 14% over the 12 months to September 30, 2026; device stocks now trade at about 97 cents per dollar of earnings versus roughly $1.30 historically relative to health care.
• The authors expect medical-device growth to normalise at mid-single-digit rates or better, supported by robot-assisted surgery and less-invasive heart-valve treatments, despite a challenging 2026 and slower post-COVID growth.

Takeaway: Investors should look beyond the AI trade and use fundamental stock selection to find resilient consumer companies and medical-device businesses whose durable growth may not be reflected in current positioning and valuations; these opportunities do not require an AI reversal.