Key Highlights

● One strategist said there are plenty of places to invest outside the AI trade.

● Eli Lilly closed at an all-time high of $1,373.70 on a raised outlook.

● Huntington Ingalls soared to $316.21 and Textron jumped to $87.46 on earnings.

● The Russell 2000 jumped 28.71 points to 2,859.22 as small caps outperformed.

As Alphabet (NASDAQ:GOOGL)'s plunge sent mega-cap tech reeling on Thursday, one Investment strategist argued the rest of the market offered real opportunities, and a long list of non-AI winners seemed to prove his point.

The quote

Speaking on Thursday, October 29, the strategist delivered one of the clearest summaries of the day: "There's plenty of other places to go with your money outside of the AI trade that have pretty decent prospects."

The remark came on a session when the Nasdaq Composite sank 365.13 points to 26,184.72 and the S&P 500 slipped 23.59 points to 7,720.39, both dragged lower by Alphabet's worst day since its 2004 IPO. The strategist also noted that small caps were outperforming on what he called a risk-off day.

Exhibit A: health care

If investors were looking for alternatives, drugmakers were the obvious first stop. Health care was the best-performing S&P 500 sector. Eli Lilly (NYSE:LLY) closed at an all-time high of $1,373.70 after quarterly Revenue of $24.40 billion beat estimates and it raised its 2026 revenue outlook. Merck (NYSE:MRK) beat on revenue and Earnings and raised its full-year profit forecast, led by Keytruda and Winrevair. The pharmaceutical ETF IHE climbed at midday.

Exhibit B: industrials and defense

The industrial and defense corners delivered some of the most dramatic gains. Huntington Ingalls (NYSE:HII), the shipbuilder, soared to $316.21 after third-quarter EPS of $5.48 crushed estimates and free Cash Flow surged to $429 million from $16 million a year earlier. Textron (NYSE:TXT) jumped to $87.46 on a beat and raised guidance. Builders FirstSource (NYSE:BLDR) climbed after topping revenue and profit forecasts.

Not every industrial name joined in. Caterpillar (NYSE:CAT) slid to $647.39 despite a record Backlog of about $78 billion, in what one report called its worst day since March 2020, after a beat that coverage described as only modest and a full-year revenue outlook that stayed unchanged. Strong numbers alone were not always enough.

Exhibit C: consumers and travel

Consumer names that had been out of favor also rallied. Home Depot (NYSE:HD) and Nike (NYSE:NKE) rose, Mastercard (NYSE:MA) climbed after a quarterly beat showing consumer spending holding up, and Norwegian Cruise Line (NYSE:NCLH) jumped after raising its 2026 profit guidance. Carvana (NYSE:CVNA) surged after record quarterly revenue of $8.04 billion, and Crocs (NASDAQ:CROX) soared to its highest price in more than two years after raising its outlook.

Exhibit D: small caps and rate-sensitive sectors

The Russell 2000 jumped 28.71 points to 2,859.22, helped by stronger-than-expected economic growth. Real estate and utilities rallied as the 10-year Treasury Yield pulled back from the multi-decade highs it touched earlier in October.

The AI trade's stumble

The flip side of the strategist's argument was a punishing day for AI-heavy stocks. Alphabet lost roughly $500 billion of Market Value after reporting negative free cash flow of $9.07 billion while keeping its heavy Capital spending plan. Software slumped after ServiceNow (NYSE:NOW) and Fortinet (NASDAQ:FTNT) disappointed, and chipmakers slid.

Another strategist offered a complementary view: "Money is rotating within the market rather than leaving it." Breadth backed that up, with more than 400 S&P 500 members rising.

What to watch

The strategist's thesis will be tested immediately. Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC) slid in after-hours trading on Thursday after their reports, and Nasdaq-100 futures dropped in extended trading. If tech weakness deepens on Friday, the question becomes whether investors keep redeploying into health care, industrials and small caps or step back from stocks entirely. Friday's Employment Cost index and earnings from Chevron and AbbVie offer the next data points.