# An AI Stock Group Fell 5% as 400 Other Stocks Gained 2.5% Last Week

By Enna Lee

Canonical URL: https://www.tokenpost.com/news/investing/35478
Published: 2026-10-20T09:06:48.000Z
Updated: 2026-10-20T09:06:48.000Z
Section: Investing

> UBS projects cloud revenue growth accelerating to 60% in the third quarter. Bond yields fell during the week as West Texas Intermediate crude rose 10%.

An AI-focused stock group fell 5% last week, while 400 stocks outside that group gained 2.5%. Every equal-weighted S&P 500 sector except technology gained. The split came as market breadth improved and investors favored defensive, higher-quality stocks.

UBS views the retreat as a positioning shift rather than evidence of a broad deterioration in company fundamentals. Its analysis found that defensive shares outperformed cyclical stocks, while higher-quality shares outpaced lower-quality ones. The bank also sees the recent gap between technology and other stocks as a sign that market gains could spread if several groups advance together.

Bond yields fell during the week, while West Texas Intermediate crude rose 10% amid concerns about Iran. The 10-year Treasury yield has climbed above 1.5 standard deviations from its one-year average for the seventh time in the past year. UBS says the rise in yields since early September has reflected position unwinding more than a reassessment of economic growth. Utilities, real estate and banks were among the rate-sensitive sectors that lagged during the rise in yields since early September, while transportation and retail stocks also faced pressure from oil prices.

CoreWeave’s credit-default swap spreads rose sharply. UBS flagged financing costs and capital commitments at newer cloud providers as concerns for the AI investment cycle. The bank also said computing demand exceeds supply and that major cloud providers have the operating cash flow and borrowing capacity to support AI investment.

UBS projects cloud revenue at the largest providers will grow 60% year over year in the third quarter, compared with 50% in the second quarter. It estimates revenue over the next four quarters at $574 billion, about 15% above consensus expectations and roughly 73% higher than a year earlier. The bank views faster cloud growth as a potential support for AI demand.

The earnings bar may also be low: nearly 70% of companies are expected to report slower earnings-per-share growth than in the second quarter. Since that earnings season began, the median stock has fallen more than 7%. At the same time, earnings estimates have risen 1.8% overall, including 3.6% for technology and 0.8% for other sectors. UBS sees that combination as leaving room for earnings to exceed expectations.

Technology earnings, inflation and employment data are among the next catalysts, along with the Nov. 3 U.S. midterm elections. The Federal Reserve’s next meeting is scheduled for Oct. 27–28.