While a crowd of investors has been buying up shares of semiconductor companies and the Magnificent Seven giants, Bank of America has identified hidden beneficiaries of the artificial intelligence boom far beyond the overheated tech sector.
The rapid AI rally of 2026 allowed Wall Street to overlook the ongoing conflict in the Middle East and set new historical highs. The Philadelphia Semiconductor Index posted a record-breaking 18-day winning streak, gaining an impressive 64.8% since the beginning of the year. Semiconductor and hardware manufacturers surged by 69% and 65%, respectively, pushing their valuations to peak levels since 2022. However, last month saw a strong profit-taking trend as investors suddenly realized that the tech hype had gone too far.
Bank of America notes that the most significant upward revisions to profit forecasts are currently occurring among non-tech companies, particularly those in the energy and materials sectors that provide the physical infrastructure necessary for AI operations. Ironically, these sectors continue to be overlooked by investors. According to the brokerage’s data, fund managers held energy stocks at a staggering 31% underweight, while the materials sector was underweight by 6% over the past three months.
Analysts emphasize that, in the context of persistent inflation and negative real cash yields, these undervalued and unpopular commodity companies offer perfect capital protection. BofA strongly advises investors to stop chasing direct beneficiaries of AI, whose valuations have skyrocketed, and to focus instead on fundamental value.
In addition, the bank recommends exploring less obvious sectors that utilize neural networks for process automation, product acceleration, and back-office streamlining. These market segments have yet to become oversaturated with speculators and present excellent potential for outperformance.