Want to Escape the AI Sell-Off? This ETF Offers a Surprising Alternative

Key Points

• The ProShares S&P 500 ex-Technology ETF excludes the tech sector entirely and has outperformed the S&P 500 recently amid an AI-driven sell-off.
• Despite omitting tech stocks, SPXT still holds significant mega-cap exposure through Amazon, Alphabet, Meta Platforms, and Tesla among its top holdings.
• SPXT offers lower volatility and a 1.27% dividend yield but has historically trailed the S&P 500 and faces thin trading liquidity.

If you’re looking for proof that nobody on Wall Street has a crystal ball, look no further than Crocs NASDAQ: CROX—the maker of plastic-based foam clogs—which is outperforming every member of the Magnificent Seven this year.

Of course, that may say more about Crocs’ more than 85% year-to-date (YTD) gain than it does about the hyperscalers’ respective performances. But between runaway CapEx, Q3 free cash flow turning negative for Alphabet NASDAQ: GOOGL, and AI stocks undergoing yet another sell-off, it’s no wonder why a $7.31 billion market cap footwear company in the consumer discretionary sector is outperforming every single one of those mega-cap stocks in 2026.

For those growing wary of the AI trade, there’s a silver lining. The S&P ex-AI Index has caught up to the S&P 500's performance this year as multiple rotations out of tech throughout 2026 have leveled the playing field.

The ProShares S&P 500 ex-Technology ETF NYSEARCA: SPXToffers another way to reduce AI-related exposure by excluding the technology sector entirely. But given historic tech sector concentration, investors who are considering shielding their portfolios from further AI-driven volatility need to closely evaluate SPXT’s safety-for-upside trade-off.

Why the AI Sell-Off Is Benefiting Other Sectors

The most recent AI sell-off has highlighted the relative strength of several nontechnology sectors as AI-related stocks have come under pressure. That’s largely been the result of the tech sector posting the worst performance over the past month of all of the S&P 500’s 11 sectors.

Its approximately 15% loss has come as a benefit for other sectors, though, with the market rotating into defensive sectors including healthcare, consumer staples, and utilities, which have seen one-month gains of 10.29%, 11.86%, and 7.87%, respectively, as of Nov. 6.

The S&P 500’s Magnificent Seven Index specifically is down 7.46% over the same period, while posting an uninspiring 6.7% YTD gain. From a technical standpoint, there could be more pain in store in Q4. The index recently broke a critical support level, which could result in ongoing selling pressure for those names as they continue to deal with the fallout from mixed earnings results.

How SPXT Reduces Tech Exposure Without Eliminating AI Risk

On the surface, the ProShares S&P 500 ex-Technology ETF presents a reasonable solution, especially for conservative investors who are comfortable with reducing their exposure to tech names. Over the past month, the fund has outperformed the S&P 500 with a one-month gain of more than 2.34%, while the index has declined approximately 5.5%.

But investors don’t turn to SPXT for outperformance. In fact, the ETF has trailed the S&P 500 over longer investment horizons, although its recent performance demonstrates how excluding technology can provide an advantage during sector sell-offs. Instead, people own the fund specifically for its exclusion of tech names.

However, that can be misleading when looking at the ETF’s portfolio. While omitting tech, SPXT still maintains plenty of mega-cap growth exposure via leading communication services and consumer discretionary names.

The fund’s top-five holdings include four of the Magnificent Seven stocks in Amazon NASDAQ: AMZN, both Class A and Class C shares of Alphabet, Meta Platforms NASDAQ: META, and Tesla NASDAQ: TSLA.

But any potential volatility stemming from those positions could be partially offset by SPXT’s two largest sectors by exposure: financials and healthcare. Eli Lilly NYSE: LLY, Berkshire Hathaway NYSE: BRK.B, and JPMorgan Chase NYSE: JPM are also among the fund’s largest holdings.

Industry exposure is similarly diversified. Specialty retail and media both account for 11.4% of the fund, while biotechnology, banks, and insurance account for another 9.3%, 5.2%, and 4.9%, respectively.

The Trade-Off: Less Tech Exposure, But Not Without Risk

While excluding the tech sector, growth remains a primary objective of SPXT. That growth is just tempered, as reflected by the fund’s lower-volatility beta of 0.85.

Still, when AI bubble fears and chipmaker sell-offs drag down the mega caps, more than 19% of the ETF’s portfolio—spread across those five aforementioned members of the Magnificent Seven—remain susceptible.

Shareholders would need to accept that some AI exposure remains while being comfortable with the communication sector and consumer discretionary mega caps over their tech counterparts.

Liquidity presents another concern. Average daily trading volume is light at around 19,000 shares, and with less than $329 million in assets under management, that issue is unlikely to abate.

But with a low-cost expense ratio of just 0.09% and a dividend that yields 1.27%, or $1.43 per share annually at current prices, investors looking to reduce their tech exposure while being paid to hold SPXT could find that enough to satisfy the trade-off of less upside potential.