Beyond Big Tech: Is the Global Stock Rally Finally Broadening?

Beyond Big Tech: Is the Global Stock Rally Finally Broadening?

For much of the post-pandemic bull market, “the rally” often meant one thing in practice: a handful of mega-cap U.S. technology platforms (and the AI supply chain wrapped around them) doing most of the heavy lifting. When index returns are being pulled uphill by the biggest weights, it can feel like markets are strong even if the typical stock is merely treading water. That’s why the idea of a broadening rally matters: it’s not just a style preference, it’s a change in how risk is being priced and how future returns might be distributed across sectors, geographies, and company sizes.

A useful way to frame the shift is to treat Big Tech leadership as the default setting of the last few years—and then ask what has to change for leadership to rotate. Part of the answer is simply math. Concentration became so extreme that even a “good year” for the overall market could still be a narrow one. In 2025, for example, the S&P 500 delivered a strong year (roughly mid-teens depending on the measure cited), while an equal-weight version of the index lagged noticeably, highlighting that the average constituent didn’t keep up with the cap-weighted headline. That’s the hallmark of a top-heavy market: breadth can improve a bit while returns remain dominated by the biggest names.

Yet 2025 also planted the first real seeds of “less-narrow” leadership. One widely followed recap estimated the “Magnificent Seven” contributed about 42.5% of the S&P 500’s 2025 total return—still huge, but notably less than half, which it had exceeded in some prior years. That nuance matters. Markets don’t go from narrow to broad overnight; they usually transition through phases where concentration remains high, but the marginal dollar starts hunting for returns in other places—industrials tied to AI infrastructure, select financials, energy, materials, and pockets of consumer cyclicals that can grow even if the tech leaders are already priced for perfection.

Early 2026 offered a clean illustration of what “broadening” can look like in real time. In the first trading days of January, the S&P 500 managed gains even while the technology sector slipped—an inversion of the familiar pattern from 2025, when tech strength was a central engine of index performance. Market breadth looked healthier too, with a clear majority of S&P 500 constituents in positive territory and a meaningful cluster already up double digits for the year, while materials and healthcare were among early leaders. That kind of tape action—index up, leadership rotating, participation widening—is exactly what investors mean when they say the rally is “moving beyond Big Tech.”

Defense has become one of the most vivid symbols of this rotation because its drivers are not primarily about cloud growth rates, ad cycles, or smartphone upgrades. They’re about geopolitics, procurement pipelines, and industrial capacity. In the U.S., defense stocks jumped sharply after President Donald Trump publicly pushed for a much larger future military budget, lifting major contractors and pushing aerospace/defense benchmarks to new highs in the process. In Europe, defense shares also surged to record highs on the same news flow, extending a multiyear trend that accelerated after Russia’s 2022 invasion of Ukraine and has been reinforced by higher spending commitments and thickening order backlogs. This is important for “broadening” because it pulls leadership toward sectors with very different fundamentals than megacap tech: multi-year contracts, manufacturing throughput constraints, and political risk—factors that can remain supportive even if the AI trade pauses.

Zooming out, materials are another classic “broadening” candidate because they often respond to a different set of macro levers: the direction of real rates, the dollar, global industrial activity, and commodity supply constraints. When investors start to believe that policy rates are closer to easing than tightening, capital-intensive cyclicals tend to get a second look. There’s also a structural overlay: electrification, grid build-outs, data centers, and re-shoring all raise the baseline demand for certain metals. That doesn’t guarantee a straight-line move—commodity markets never do—but it helps explain why big institutions keep returning to the idea that metals and mining can be a 2026 “catch-up” trade if growth holds and supply remains tight in key inputs like copper.

Consumer discretionary is a more nuanced part of the story, because “discretionary” contains both old-economy cyclicals and some of the very tech-adjacent winners that dominated earlier phases of the rally. In other words, discretionary can either reinforce concentration (if the gains are mostly in the same mega-cap complex) or it can broaden participation (if travel, leisure, retail, autos, and mid-cap consumer names start to carry more weight in returns). The mechanism here tends to be confidence and cash flow: easing financial conditions, steady labor income, and better credit availability widen the set of companies that can grow earnings at an attractive rate. It’s not an accident that strategists talking about broadening often pair the theme with small-caps and cyclicals, because those parts of the market are typically more sensitive to rate expectations and domestic growth than the global platform giants.

So what’s really changing when leadership rotates away from only Big Tech? At a high level, it’s a shift from a single dominant narrative (“AI + platform scale + margin durability”) to a more mixed bundle of narratives that can coexist: defense rearmament, industrial capacity expansion, the physical build-out behind digital infrastructure, and a consumer that’s still spending in pockets even as preferences shift. One underappreciated point is that a broadening rally doesn’t require tech to collapse. It can simply mean tech goes from being the market to being a part of the market—still important, still innovative, but no longer the only place where earnings surprises and multiple expansion are allowed.

Another way to see broadening is to follow where flows and positioning pressure are building. In late 2025, sector dashboards and strategy notes highlighted that while tech and tech-adjacent areas had momentum, investors were increasingly scanning cyclicals like financials, industrials, and materials for opportunities “outside of the big AI players,” especially as the outlook shifted toward monetary easing and continued infrastructure investment. That’s the behavioral side of broadening: when the crowd is heavily positioned in one place, even a small change in rates, earnings expectations, or policy can spark rotation into laggards—sometimes amplified by short covering and systematic rebalancing.

There are also practical reasons investors want broadening to be real (even if they’re still bullish on AI). Narrow markets tend to be fragile. If a tiny set of stocks holds the steering wheel, an earnings stumble, a regulatory shock, or a valuation reset in that cluster can dominate index-level outcomes. Broad participation spreads the load. That doesn’t eliminate drawdowns, but it can change their character: corrections become less about one crowded trade breaking and more about the overall growth/inflation mix. Wells Fargo’s early-2026 framing captured this intuition: a move away from mega-caps can reduce concentration risk and create room for laggards to contribute.

Of course, “broadening” can be faked by short bursts of rotation that fade the moment tech resumes leadership. The way to tell the difference is to watch whether breadth measures keep confirming. You don’t need a Bloomberg terminal to think like a breadth analyst. If more stocks are making new highs, if equal-weight indices stop persistently lagging, and if advance/decline type indicators trend upward alongside the index, participation is improving in a durable way. Pair that with earnings revision breadth—how many companies are seeing upward estimate changes—and you get a cleaner picture of whether leadership is expanding because fundamentals are improving, or simply because money is sloshing around.

There’s a global layer here too. A rally broadening “beyond Big Tech” doesn’t have to be only a U.S. sector story; it can also mean investors are adding exposure to international equities, commodities, and different factor tilts that were overshadowed by U.S. mega-caps. Large asset managers’ 2026 outlooks have repeatedly emphasized diversification—across regions, styles, and real assets—after years when one country and one cluster of companies did so much of the work. If the dollar softens and global growth is supported by easier policy, the relative appeal of non-U.S. equities and real assets tends to rise—one more channel through which the “market story” can widen.

None of this means Big Tech is “done.” It means the hurdle rate for continued dominance is higher because expectations are already elevated and weights are already enormous. When a group is over a third of an index by market cap, it doesn’t have to disappoint to stop dominating—it only has to perform “normally.” In that world, other sectors don’t need to become the new tech; they just need to be good enough, with valuations and earnings trajectories that look attractive in comparison.

If you’re trying to translate this theme into a simple mental playbook, think in terms of engines. The last cycle’s primary engine was digital scale and AI excitement. A broader cycle adds more engines: defense production and aerospace supply chains; materials tied to electrification and infrastructure; industrials that build the physical backbone of the AI economy; and selective consumer discretionary areas that benefit from easing financial conditions. When multiple engines are firing, rallies tend to feel less “magical” (fewer days where two stocks explain the whole index move) and more like a classic expansion where lots of companies participate.

The healthy version of broadening is not about abandoning technology. It’s about the market rediscovering that profits are generated in many places: in factories and foundries, in logistics networks, in mines and mills, and in the unglamorous businesses that quietly compound when capital is cheaper and demand is steady. The real question for 2026 isn’t whether tech will still matter—it will—but whether the next leg of the rally can be carried by a wider coalition. Early signs in breadth, sector leadership, and the resurgence of defense and materials suggest the coalition is forming.