A massive shift has started since the beginning of this year.
For the past two years, the “artificial intelligence” (AI) narrative has driven the market to eye-watering heights, but the tide is finally starting to turn.
We are witnessing an early-stage rotation out of AI leadership and into “real economy” industries.
The End of the Bull Market?
Not quite, and here’s why.
Although the recent market weakness was led by prominent memory-chip makers, some of the non-tech sectors are doing well – money isn’t leaving the market; it’s simply moving house.
Here’s the thing: Investors are having doubts about the seemingly infinite demand for AI hardware, with many drawing parallels to the dot-com bubble.
It didn’t help when Broadcom’s (NASDAQ: AVGO) sales and AI chip forecast in its latest earnings update came in below expectations, fuelling the market’s scepticism.
Despite investors’ wary sentiments about the AI growth trajectory, closer to home, Temasek just announced its plan to double its AI investments by 2031.
Although the long-term growth prospects of AI-linked stocks aren’t broken, the importance of diversification shouldn’t be ignored.
Here are some non-AI, but still comparatively great businesses that might be a good complement to your AI-exposed holdings.
Mastercard (NYSE: MA) – Sticky Financial Toll Booth with a Rising Value-Added Service Segment
Mastercard is a prominent payments network provider that operates in over 220 countries, collecting fees for every authorisation and settlement.
In the second quarter of 2026 (2Q2026), Mastercard’s revenue grew 14% to US$9.3 billion year on year (YoY), while net income rose 19% to US$4.4 billion.
The results were spearheaded by Mastercard’s growing payments network and value-added services and solutions (VAS).
Besides enabling payment through physical credit cards, Mastercard also offers blockchain, account-to-account and fast Automated Clearing House (ACH) digital payment services.
Crucially, VAS such as Decision Intelligence Pro and Mastercard Threat Intelligence offer real-time fraud detection, boosting consumers’ confidence in real-time payments, which in turn drives more transaction volume.
The increased transaction volume facilitates fraud detection learning. This improves detection rates and sustains the flywheel effect to the benefit of investors.
MercadoLibre, Inc. (NASDAQ: MELI) – The Latin American Consumer Flywheel
MercadoLibre, the leading e-commerce and fintech giant in South America, offers investors an opportunity to diversify from the perceived AI bubble risk that has gripped North American tech titans.
The South American company operates a flywheel business that gets better over time.
At the core of the flywheel is MercadoLibre, the company’s namesake e-commerce marketplace, which drives high-intent users to Mercado Pago, its digital payments system, generating an invaluable pool of behavioural data.
The behavioural data is then fed into Mercado Credito, Mercado Pago’s credit service, and the data enables risk modelling that facilitates the company’s consumer lending business.
Vast transaction volumes from the marketplace enable economies of scale for MercadoLibre’s fulfilment network as order-density rises.
MercadoLibre reported 49% revenue growth to US$8.8 billion for the first quarter of 2026, but operating margin declined 600 basis points (bps) YoY to 6.9% as the company prioritised long-term growth investments over short-term profitability.
The investments are expected to strengthen the company’s entire ecosystem.
UnitedHealth Group (NYSE: UNH) – The Healthcare Behemoth
UnitedHealth Group is the largest provider of Medicare Advantage in the US, which is conceptually similar to Singapore’s Integrated Shield Plans, which are private healthcare insurance plans that supplement government-backed healthcare insurance.
But UnitedHealth does not just sell insurance.
It also owns clinics and pharmacies, and provides data analytics through its Optum arm, which drives a diverse range of healthcare innovations and services.
Crucially, the company is prioritising margin recovery from the headwind of the 2025 Medicare funding cut.
In 2Q2026, UnitedHealth reported a 56% YoY surge in adjusted net earnings to US$6.38 per share, on the back of a marginal 0.4% YoY increase in revenue to US$112 billion, demonstrating its turnaround is gaining traction.
UnitedHealth’s management exited unprofitable markets, selectively participated in new ones, and had efficient benefit-planning that aligns with prevailing trends.
With 70% of its employed providers equipped with AI tools for ambient listening, UnitedHealth’s patient-facing time increased by 200,000 hours.
The company’s management thinks such achievements are only in the early innings.
Get Smart: Diversification Beyond the AI Trade
The secular growth of AI isn’t broken – it has taken a break after about two years of meteoric rise.
Still, diversification is key for disciplined investors.
If your portfolio is highly concentrated in AI-exposed tech stocks, consider rotating into some non-AI names to achieve a diversified, balanced portfolio.
By diversifying into the above names, investors benefit from an optimised portfolio that cushions against extreme tech-sector swings while staying exposed to AI’s secular growth.
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Disclaimer: Larry L. owns shares of Broadcom.
