If the September Effect Hits Artificial Intelligence (AI) Stocks This Year, History Says This Is the Best Place to Hide
2026-09-01 23:30
•Adam Spatacco •The Motley Fool
••••••• •••••••••• Axe Cap view
Where to Shelter If AI Stocks Falter This September
Despite the AI rally, September’s seasonal weakness suggests rotating into safer South African sectors is wise.
September has a long history of tripping up US markets, with the S&P 500 dipping on average by about 1.1%. The AI-heavy 'Magnificent Seven' stocks—names like Nvidia, Microsoft, and Apple—now make up a third of the index, raising the risk of sharper pullbacks if the seasonal pattern holds. Even though 2024 showed some resilience, it’s smarter not to bet on a smooth path. For local investors, this means watching the rand closely. A risk-off mood in the US often pushes USD/ZAR higher, making imports pricier and hurting retailers and industrials. Given this, South African defensive sectors like AngloGold Ashanti and standard bearer staples like Shoprite and Woolworths become natural havens. Gold miners especially benefit from rand weakness and global volatility. Avoid chasing the tech hype blindly right now—rebalance and consider trimming your offshore tech exposures in favour of these local, steadier names. This stance isn’t bulletproof; a strong US dollar or a surprise AI boom in September could flip the script. this is just our opinion and not financial advice
Trim offshore AI-centric tech exposure and increase holdings in local gold miners like AngloGold Ashanti and defensive retail stocks such as Shoprite. Keep an eye on USD/ZAR for timing re-entry to growth sectors later.
- AngloGold Ashanti
- Shoprite
- USD/ZAR
- A strong US dollar boosting rand strength and hurting gold exporters
- A late surge in AI stocks defying seasonal trends
6/10
September historically shows negative returns averaging -1.1% for the S&P 500 since 1928. With the Magnificent Seven AI stocks comprising 34% of the index, concentration risk could amplify seasonal weakness. However, recent years show mixed results—2023 saw declines while 2024-2025 posted gains. Rather than avoiding AI stocks entirely, investors should rebalance positions and rotate into defensive assets like gold, utilities, and bonds during September weakness.
Our take is based on reporting first published by The Motley Fool.