Bill Smead Bets on Forgotten Sectors as AI Mania Runs Hot As Wall Street rides an AI-fueled rally, veteran investor Bill Smead is staying grounded — and looking far beyond Silicon Valley. Smead, founder and chief investment officer of Smead Capital Management, believes that when the AI boom fades, it’ll be average Americans — not tech giants — who keep portfolios alive. Through his $4.5 billion Smead Value Fund (SMVLX), Smead focuses on “buying great businesses when they’re deeply out of favor” and holding them long term. “We look for consistent profits, strong balance sheets, and defendable market positions,” he told MarketWatch. Avoiding the AI Frenzy Unlike many funds chasing big tech, Smead’s top holdings sit in consumer discretionary and energy, not AI. While his fund has lagged the Russell 1000 Value Index this year, it’s ahead over the past five and ten years. “I don’t envy people making money in the racy stuff,” he said, adding that AI investments are being made “like drunken sailors on leave.” Smead expects a “lost decade” ahead — similar to the years after the dot-com bubble and financial crisis — with two bear markets likely in the next seven to eight years. His strategy: avoid what will hurt most when the tide turns. Investing in Everyday America Smead sees risk in baby boomer spending drying up when markets stumble, though his son and co-manager Cole believes younger generations will carry on the economy. Their solution is to invest in companies tied to the real economy — the kind that serve the everyday consumer. One Quiet Tech Bet Though skeptical of AI hype, Smead still holds Qualcomm (QCOM), a company delivering 40–50% returns on equity for a decade. “Nobody’s paying attention to them because they’re not part of the AI story — and that’s exactly why they’re cheap,” he said. If Qualcomm grows earnings 10% annually for the next ten years, Smead believes it could be “a spectacular stock” — proof that patience and value still matter, even in an AI-obsessed market.

Wall Street Takes a Breather After Record-Breaking Run U.S. markets cooled off Thursday as both stocks and gold slipped from record highs, signaling a brief pause after weeks of powerful gains. The S&P 500 fell 0.3%, marking only its second loss in 10 days. The Dow Jones Industrial Average dropped 243 points (0.5%), while the Nasdaq edged down 0.1%. After a stellar rally, gold also retreated — down 2.4% to below $4,000 per ounce — as traders caught their breath following a surge fueled by expectations that the Federal Reserve may soon begin cutting rates to support the economy. Markets have been on a relentless climb — with the S&P 500 up 35% since April — raising concerns that prices might have run too far, too fast, particularly among AI-related stocks that have dominated recent gains. Dell Technologies dropped 5.2%, the day’s biggest S&P 500 loser, though it remains up nearly 11% for the week after highlighting strong AI growth prospects. Tesla slipped 0.7% after U.S. regulators opened a probe into its “Full Self-Driving” software. Helping offset those losses, Delta Air Lines jumped 4.3% after reporting better-than-expected summer profits and projecting stronger year-end earnings, citing a steady recovery in business travel and solid demand. With the U.S. government shutdown halting key economic updates — including the weekly jobless claims report — investors are turning to corporate earnings to gauge the economy’s pulse. PepsiCo rose 4.2% after beating quarterly expectations and posting stronger North American drink sales. Akero Therapeutics surged 16.3% after Novo Nordisk announced plans to buy the biotech firm for up to $5.2 billion. MP Materials gained 2.4% after China imposed new export restrictions on rare earths, and Costco climbed 3.1% on an 8% year-over-year revenue jump in September. At the close: Overseas, performance was mixed. Ferrari slid 15.4% in Italy after disappointing forecasts, while Shanghai stocks rose 1.3% after reopening from a holiday. Japan’s Nikkei 225 advanced 1.8%, driven by an 11.4% jump in SoftBank Group following its $5.4 billion deal to acquire ABB’s robotics division. In bonds, the 10-year Treasury yield inched higher to 4.14% from 4.13%.