Even after a 45-month bull run, Wall Street analysts still expect the S&P 500 to keep climbing through 2026 and beyond, with artificial intelligence remaining the biggest driver of the current cycle. FinancialMediaGuide notes that the sectors analysts currently favor to outperform aren’t the obvious technology-heavy plays most investors would expect, which is exactly what makes the current setup worth a closer look.
Communication and media companies are expected to produce better returns over the next 12 months than any other sector, with a bottom-up price target 32.4% above levels seen at the end of June. The Vanguard Communication Services ETF offers exposure to the sector with an expense ratio of just 0.09%, making it one of the cheaper ways to invest in the group.
Meta Platforms and Alphabet dominate the fund, together accounting for roughly 44% of the portfolio, alongside holdings including Verizon, Disney, AT&T, Netflix, Comcast, T-Mobile and Warner Bros. Discovery. FinancialMediaGuide points out that Meta and Alphabet were only reclassified from technology into the communications sector in 2018, meaning what looks on paper like a diversified media fund is, in practice, still very much an AI-infrastructure bet.
Both companies are investing tens of billions of dollars annually to build computing capacity and develop large language models, then using those models to improve their own advertising platforms. Alphabet’s cloud business is seeing solid revenue acceleration, while Meta could eventually begin selling access to its data centers, opening a significant new ancillary revenue stream.
The consumer discretionary sector, covering retailers, travel companies and automakers, is also drawing strong analyst expectations despite consumer sentiment sitting near historical lows. The Vanguard Consumer Discretionary ETF charges the same 0.09% expense ratio and gives investors exposure to a sector analysts still expect to outperform even as spending power remains under pressure. FinancialMediaGuide finds it notable that analysts remain constructive on a consumer-facing sector at a moment when sentiment readings suggest households are pulling back, underscoring how much of the sector’s expected performance rests on just a couple of names.
Amazon and Tesla combine to account for nearly 40% of that fund, alongside holdings such as Home Depot, McDonald’s, TJX Companies, Booking Holdings, Lowe’s, Starbucks, Marriott and General Motors. Amazon remains the world’s largest online retailer but is increasingly valued for its cloud computing business, backed by roughly $200 billion in planned data-center investment this year and a substantial backlog of contracted revenue. Tesla, meanwhile, is investing heavily in AI for its robotaxi and humanoid robotics ambitions, bets that carry significant upside but also considerable execution risk.
If consumer sentiment improves, the concentration of Amazon and Tesla in the fund could ease, but for now the two names are driving the sector’s outlook almost single-handedly. Financial Media Guide concludes that both ETFs illustrate the same broader pattern in today’s market: even funds built around traditionally non-technology sectors are, at their core, increasingly just another way to buy exposure to the handful of companies building out AI infrastructure.
