Mega-rotation could be biggest since post-pandemic:
Mega-rotation out of Big Tech is going to be a major theme for investors for the rest of 2026, predicts the CEO of one of the world’s largest independent financial advisory organisations.
The prediction from deVere Group’s Nigel Green comes as investors accelerate a broad shift away from concentrated positions in mega-cap technology stocks and into financials, industrials, healthcare, energy, infrastructure and value sectors, following softer-than-expected US jobs data and growing evidence that market leadership is widening.
The S&P 500 Equal Weight Index is enjoying its strongest relative start to a year since 1992, while equal-weight US equities have outperformed their market-cap weighted counterparts in recent months, highlighting a major broadening of participation beyond the largest technology stocks. The shift comes as the Dow Jones Industrial Average notched its second record closing high last week, rising above 52,900 as investors rotated into economically sensitive sectors while reducing exposure to parts of the technology and semiconductor complex.
He says: “We believe investors are witnessing the beginning of one of the most important reallocations of capital since the post-pandemic recovery.
“For years, returns became increasingly concentrated in a handful of mega-cap technology companies. This trade generated exceptional wealth. It also created extraordinary concentration risk.
“Investors are now repositioning aggressively because they recognise that opportunity has expanded far beyond the narrow group of stocks that dominated markets over recent years.
“We expect this mega-rotation to become one of the defining investment themes for the remainder of 2026.”
The shift accelerated after the latest US employment report showed the economy added just 57,000 jobs in June, roughly half of consensus expectations, while previous months were revised lower.
Markets responded by sharply reducing expectations of further Federal Reserve tightening, with investors increasingly betting that the Fed will remain on hold as labour market momentum cools. The shift in interest rate expectations has helped fuel renewed interest in sectors that have lagged the AI-led rally and stand to benefit from a more stable monetary environment.
The deVere CEO continues: “The labour market data has reinforced a growing belief that the next phase of this market cycle will look very different from the previous one.
“Investors are increasingly positioning for a world in which interest rates stabilise, economic growth moderates rather than collapses, and market leadership broadens substantially.
“The combination creates enormous opportunities.
“The Federal Reserve remains central to this story. Markets are increasingly concluding that policymakers have room to be patient, and that changes the opportunity set for investors considerably.
“When interest rate expectations stabilise, capital typically broadens out across the market. We believe that process has already begun.
“We remain very bullish on artificial intelligence over the long term. AI will continue to reshape industries, business models and investment portfolios for years to come.
“But investors are asking an increasingly important question: where does the next wave of returns come from?
“Our answer is becoming clearer by the week.”
Wall Street strategists have increasingly described the current environment as a major rotation trade, with capital flowing into cyclical and value-oriented sectors after years of extreme technology dominance.
Recent weakness in momentum-driven semiconductor trades has further strengthened expectations that broader market participation could become a defining feature of the second half of the year.
Nigel Green explains: “We believe financials, industrials, healthcare, infrastructure, energy and selected consumer sectors are entering a powerful period of renewed investor demand.
“These sectors possess attractive valuations, strong earnings potential and significant room for capital inflows.
“The opportunity set available to investors today is arguably broader than at any point over the last several years.
“When market leadership expands, bull markets become stronger, deeper and more durable. The process is now underway.”
He concludes: “Many investors remain anchored to the winners of the previous phase of the cycle. History teaches us that such an approach rarely delivers the strongest returns.
“The investors who identify major transitions early are typically the ones who benefit most.
“The mega-rotation has powerful economic, monetary and valuation drivers behind it.
“Our view is that this trend has further to run, participation will continue to broaden, and the opportunities emerging across global markets are exceptionally compelling.”