The count of S&P 500 stocks trading with negative beta to the index hit a record high on July 31, according to Evercore ISI. Strategist Julian Emanuel says the shift reflects dispersion between AI-linked winners and the rest of the market, not a warning that the AI trade is about to unwind.
Over a rolling six-month stretch, 121 S&P 500 stocks recently traded with negative beta to the index, the highest count going back to 1990, according to an analysis from Evercore ISI's Julian Emanuel shared with MarketWatch over the weekend. Stocks in the index are increasingly moving in opposite directions on a given day, so volatility beneath the surface runs higher than the index's overall performance would suggest.
Dispersion returns to a decades-high level
Dispersion beneath the surface of the index has touched one of the highest levels in history in 2026, as investors piled into AI-linked memory and industrial names such as Micron, Sandisk and Caterpillar. Meanwhile, shares of once-hot software stocks got crushed as those laggards fell behind. A beta reading above 1 signals a stock swings more than the market; negative beta means the stock tends to move in the opposite direction.
Before this latest episode, the last time the number of negative-beta stocks peaked was in early 2001, as the dot-com bubble was deflating.
Not a bubble signal, Emanuel says
According to MarketWatch, Emanuel said "what the chart is trying to say is completely different" depending on who is looking at it, since bears read it as a sign the AI trade is cracking. Emanuel sees it differently. Rather than a warning, he argues the record shows the market splitting into two camps — AI stocks and non-AI stocks — giving investors a way to diversify beyond a single theme, something many professionals have said the S&P 500 lacks since the bull market began.
That diversification shows up in the index's largest negative-beta names: Walmart, ExxonMobil and Johnson & Johnson, all defensive, dividend-paying stocks spanning consumer staples, energy and healthcare.
Emanuel keeps his 9,000 target
Despite flagging the split, Emanuel maintained his outlook for U.S. stocks, saying 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.
Source: MarketWatch
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