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Got AI Trepidation? Hedge Your Bet With Industrials

BY | ETF Database
10:45 am ET 09/14/26 | 7 VIEWS
The last couple of days have certainly been interesting for AI bulls and bears alike.Key Takeaways: It’s been a tale of two cities for AI investors as of late, with breakout Oracle earnings coming out amid growing calls to slow down the pace of AI development. This could create a good opportunity for sectors that benefit from AI, but aren’t beholden to it for growth. This includes the industrials sector, which investors can gain access to via a fund like the State Street Industrial Select Sector SPDR ETF (XLI A). On Thursday, September 10th, Oracle announced its Q1 2027 earnings results, which were largely positive. Adjusted earnings per share came in at $1.92, compared to analyst expectations of $1.74. Meanwhile, Oracle reported revenue of $19.35 billion, outpacing the analyst consensus of $19.14 billion. Part of Oracle’s success is tied to its accelerating cloud operations. Cloud revenue grew by about 62% in the quarter to a total of $11.61 billion. Oracle’s strong earnings performance may have inspired further confidence in the future of artificial intelligence, given how heavily the company and its cloud services employ the technology. However, some developments may be causing a bit of a speed bump in the tech sector’s AI momentum. See More: Apple’s Foldable iPhone Duo Steals the SpotlightPumping the Brakes on the AI RaceOn Saturday, Dario Amodei, CEO of Anthropic, published a call to slow down the pace of AI development. Amodei’s essay came shortly after an AI researcher at Anthropic resigned and then accused both OpenAI and Anthropic of behaving recklessly in their respective AI development cycles. Naturally, this news rattled many, creating near-term confusion over what the long-term outlook of these AI giants will be. Some investors responded on Monday by pulling out of chipmaker stocks. This creates a difficult juncture for advisors and investors to navigate. It’s likely too soon to pull out of the AI buildout just yet, but the long-term implications of these developments are very uncertain.Industrials Offer a Compelling OpportunityInstances like this could prove to be a good investment case for outside-the-box sectors that benefit from the AI buildout, but aren’t necessarily tied to the tech sector. As an example, take a look at a fund like the State Street Industrial Select Sector SPDR ETF (XLI A). See More: Blend Innovative Growth & Defense With Healthcare ETFs XLI provides low-cost investment exposure to the industrials sector within the S&P 500. The industrials sector has seen strong momentum from the AI buildout, due to the need for stronger data center infrastructure. It’s crucial to note that XLI is certainly not beholden to the AI space in order to see growth. Industrials companies are benefiting from other tailwinds, such as manufacturing reshoring and defense spending. Of course, XLI is not holding exposure to Oracle. Oracle is a tech company, and those looking to ride its strong earnings report may want to consider a tech-focused approach like the State Street Technology Select SPDR ETF (XLK A) instead. However, XLI’s investment approach can help the fund position itself well regardless of whether the AI sector thrives or not. If AI growth continues to happen, industrials benefit from the need for data centers. However, if that growth slows, industrials can instead grow through reshoring, infrastructure spending, defense spending, and more. For more news, information, and analysis, visit our Sector Investing Content Hub.

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