Only 20 Stocks Are Holding Up the Market: 3 Bargains Outside AI

Key Points

• Whitney Tilson argues record index highs mask a broad bear market, since 19 of the top 20 S&P 500 contributors are AI-related while most stocks lag.
• Tilson favors three non-AI value picks: speculative Joby Aviation, undervalued Casey's General Stores, and underappreciated Eli Lilly, each hit by sentiment rather than fundamentals.
• Each stock has a specific catalyst to watch: Joby's first commercial flight, Casey's in-store same-store sales, and Eli Lilly's retatrutide FDA filing.

The market has hit a record high, and almost none of that belongs to the average stock.

That gap is where Whitney Tilson of Stansberry Research is doing his shopping. His case is that the index is masking a broad bear market underneath, and that the cleanest values right now sit entirely outside artificial intelligence. Three names carry the argument: a speculation, an off-the-radar mid-cap, and the largest drugmaker in the world.

A Record-High Index Is Masking a Market-Wide Bear Market

By Tilson's count, 19 of the 20 largest contributors to the S&P 500 this year are AI-related, and those names account for essentially the entire 13% index return. The other 480 stocks are collectively flat. Roughly 59% of S&P 500 components trade at least 20% below their all-time highs, and about one in six is down 50% or more.

That is what a bifurcated market looks like, and it is why a value investor staring at a 99th-percentile Shiller multiple still has a long shopping list.

Tilson works the old Buffett-Munger way: estimate what a private buyer would pay for the whole business, then buy at a steep discount. The approach needs the market to make mistakes, and a market this narrow makes plenty. ServiceNow NYSE: NOW was the recent one. Investors priced in agentic AI gutting enterprise software subscriptions, large corporations declined to rip out systems that worked, and the stock recovered sharply.

Joby Aviation Is a Speculation With a Second Buyer Attached

Joby Aviation NYSE: JOBY builds an electric aircraft that takes off vertically, then rotates its motors forward to fly. It behaves like a helicopter and runs roughly 99% quieter, which is the entire commercial argument: most helicopters are not welcome over cities.

Tilson first recommended it near $7 three years ago. It tripled, then round-tripped back to about $7 and a $6 billion market cap. The caveats are not small. No revenue, no FAA approval, no commercial flights. This is a position to size carefully, not a core holding.

The market is pricing a delay. Commercial service in the United Arab Emirates, a 30-minute hop between Abu Dhabi and Dubai, slipped when regional conflict interrupted the timeline, and investors who saw no near-term catalyst sold. U.S. approval is realistically one to two years out, though Joby sits further along than any competitor.

What could change sentiment is the first paying flight. What limits the downside is everything else the company owns: electric motor and battery technology, an engineering team, and aircraft already delivered to the U.S. Air Force, where a silent airframe has obvious value. If air taxis never become a business, Tilson expects a bidding war from electric vehicle makers and defense primes.

Casey's General Stores Looks Like Walmart Did in 1988

Casey's General Stores NASDAQ: CASY runs about 3,000 convenience stores across 19 states from a Des Moines headquarters, on roughly $18 billion in revenue and a $22 billion market cap. It is the third-largest convenience chain in the United States and the fifth-largest seller of pizza, which is the point: the high-margin "inside" business carries the model, and more than half of sales now run through the app.

The stock fell about 34% in two months, dropping it from 35 times forward earnings to 26. The trigger was a quarter where fuel margin carried the beat while in-store comps decelerated and management reaffirmed rather than raised guidance. At a premium multiple, reaffirming is not enough.

Nothing about the competitive position changed. Walmart NYSE: WMT carried the same $18.6 billion in trailing sales in mid-1988, at nearly identical profitability and nearly the identical forward multiple, and has been close to a 100-bagger since. The comparison is not a forecast. It is a reminder that 26 times is cheap for a business that can compound earnings at a double-digit rate for a decade. Casey's targets towns of 500 to 20,000 people, and Texas alone holds roughly 2,000 of them.

Eli Lilly's Next Obesity Drug Is the Part the Market Is Discounting

Eli Lilly NYSE: LLY carries a trillion-dollar market cap and trades near 40 times trailing earnings, which makes it look like a story investors already missed. Tilson puts the company in the middle innings at most.

Two things support that. The first is retatrutide, Lilly's next-generation weight-loss candidate and the first to target three hormone receptors at once, rather than the two that tirzepatide targets in Zepbound and Mounjaro. Average weight loss in trials has run closer to 29% against roughly 20% on Zepbound, with less muscle loss. Lilly plans to file with the FDA in early 2027, which puts a launch in late 2027 at the earliest.

The second is the size of the eventual market. Studies keep surfacing benefits beyond weight itself, across fatty liver disease, sleep apnea, inflammation, cholesterol, and addictive behavior. The argument is that demand eventually extends past people who need to lose weight, with low-dose use becoming common among people who do not.

On estimates Tilson believes are too conservative, Lilly trades near 28 times forward earnings, below where it has sat for most of the past few years.

Where the Risk and the Upside Sit

The risk is uneven. Joby can drift for quarters without a catalyst and burn goodwill along the way. Casey's needs in-store comps to stabilize, because a fuel-led beat leaves guidance looking fragile. Lilly faces real pricing pressure across the category and a long regulatory runway before retatrutide sells a single dose.

The upside shares one trait. All three sold off on sentiment rather than broken fundamentals, which is the only condition under which a value approach works at all.

Watch the catalysts instead of the quotes: first commercial flights at Joby, inside same-store sales at Casey's, and the retatrutide filing at Lilly. Those are the things that move these three.

For investors looking for more of Tilson's insights, visit here.