By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel discusses a potential rotation into consumer staples and retail stocks like TJX, KO, and MNST, driven by strong earnings and defensive characteristics. However, the high valuations (32x, 26x, 44x) and macro risks suggest this could be a crowded trade that may reverse if AI earnings disappoint or macro conditions deteriorate.
Risk: High valuations and macro risks could lead to a reversal in the upmove of these stocks.
Opportunity: Strong earnings and defensive characteristics may continue to attract investors seeking stability.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
It has been a rough stretch for the market's artificial intelligence (AI) favorites. The tech-heavy Nasdaq Composite dropped more than 4% last Friday -- its biggest single-day decline since April 2025 -- led by a steep sell-off in chip stocks. And the index fell nearly 2% more on Wednesday. Yet that same day, even as the S&P 500 slid 1.6%, 22 of its stocks hit new 52-week highs -- and 11 of them reached all-time highs.
Three of those record-setters stand out: off-price retailer The TJX Companies (NYSE: TJX), beverage giant Coca-Cola (NYSE: KO), and energy drink specialist Monster Beverage (NASDAQ: MNST). TJX's record reaches back to its initial public offering in 1987, Coca-Cola's to its 1919 listing, and Monster's to its days as Hansen Natural (before it changed its name to Monster Beverage in 2012). And as of this writing, Coca-Cola and TJX have pushed to fresh highs again in Thursday's session. Notably, the small-cap Russell 2000 index has also outperformed the Nasdaq on the pullback's worst days.
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Here's a closer look at what's working at each company -- and what their new highs may say about where money is moving.
TJX, the company behind the T.J. Maxx and Marshalls chains, reported results for its fiscal first quarter of 2027 (the period ended May 2, 2026) last month. Net sales rose 9% year over year to $14.3 billion, and comparable sales increased 6%, with every division growing both comparable sales and customer transactions. HomeGoods led the way with a 9% comparable sales increase. And earnings per share jumped 29% to $1.19.
Management also raised its full-year outlook and now expects fiscal 2027 earnings per share of $5.08 to $5.15, up 7% to 9% on a non-GAAP (adjusted) basis.
"Throughout our 50-year history, we believe that the flexibility and resiliency of our business model and our wide customer demographic have been tremendous advantages that have allowed us to successfully navigate through many types of macroeconomic and retail environments," said TJX CEO Ernie Herrman during the company's fiscal first-quarter earnings call.
Investors are paying up for that consistency, with shares trading at a price-to-earnings ratio of about 32 as of this writing.
But the rotation isn't only lifting retailers. Coca-Cola's first-quarter results, reported in late April, showed steady demand across the beverage giant's portfolio. Organic revenue (which excludes currency swings, acquisitions, and divestitures) grew 10% year over year, alongside 3% growth in unit case volume -- a gauge of demand that strips out pricing.
Profitability was arguably the bigger story. Coca-Cola's operating margin expanded to 35% from 32.9% in the year-ago quarter, helping adjusted earnings per share rise 18% to $0.86.
There's also the dividend, which Coca-Cola raised in February for a 64th consecutive year. The stock yields about 2.5%, and shares trade at a price-to-earnings ratio of about 26.
Monster's record may be the most surprising of the group, because the company isn't acting like a defensive stock. In the first quarter, reported in early May, Monster's net sales jumped 26.9% year over year to $2.35 billion -- the first time the company has topped $2 billion in sales in a first quarter. Net sales to customers outside the U.S. surged 44.9% to about $1.06 billion -- about 45% of total sales and the highest share in the company's history for a single quarter.
That growth carried to the bottom line, with operating income climbing 28.1% to $730 million and earnings per share rising 27.6% to $0.58. Of course, the quarter wasn't perfect. Monster's gross margin slipped to 55% from 56.5% a year earlier, weighed down by geographic sales mix and higher aluminum can and freight costs.
Monster shares trade at a price-to-earnings ratio of about 44 as of this writing -- a far richer valuation than that of its beverage peer Coca-Cola.
So, what should investors make of this?
I don't think these record highs are a timing signal to dump AI stocks. Market leadership rotates constantly, and chip stocks recovered some ground earlier this week before falling again.
Instead, the takeaway may be that diversification is working the way it's supposed to. While the market's most popular trade tumbled, businesses selling marked-down apparel and everyday beverages quietly set records, steadying portfolios that owned them alongside high-flying tech names.
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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Monster Beverage and TJX Companies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"The 'rotation' claim lacks evidence of broad capital shifts and ignores elevated valuations that leave little margin if growth disappoints."
The article frames TJX, KO, and MNST all-time highs as evidence of capital rotating out of AI amid Nasdaq weakness, but this reads as selective. TJX's 29% EPS jump and raised guidance, KO's 18% EPS growth with margin expansion, and MNST's 27% international sales surge are real, yet all three trade at premium multiples (32x, 26x, 44x) that assume continued execution. Broader context missing: only 22 S&P 500 names hit 52-week highs on a down day, small-cap outperformance was fleeting, and AI names have rebounded quickly in prior dips. No data shows sustained outflows from tech.
These results could mark the start of durable leadership rotation if macro data keeps favoring value and staples over growth, especially with KO's 64th dividend hike and TJX's resilient model.
"Defensive leadership with high cash-flow quality is driving the highs, but the sky-high multiples leave little cushion if macro growth or AI demand weakens."
While the headline reads as a rotation away from AI, the three all-time highs come from consumer staples/retail: TJX, KO, and MNST offer durable cash flows and steady demand, suggesting investors are prioritizing earnings visibility over disruption bets. Yet valuations are pricey (roughly TJX 32x, KO 26x, MNST 44x), so the move may reflect defensive yield and buybacks more than a structural leadership shift. Risks include macro deterioration or AI earnings disappointments that could snap the upmove, and the article’s breadth is thin on how widespread AI exposure actually remains in the market.
This looks like a short-term, liquidity-driven bid into defensives aided by buybacks and index rebalancing, not a durable leadership shift; if AI momentum stabilizes or growth surprises reappear, these highs could reverse quickly.
"The current rotation into consumer staples is driven more by extreme valuation premiums than by fundamental safety, leaving these stocks vulnerable to a sharp re-rating if market volatility subsides."
The rotation into TJX, KO, and MNST isn't a 'defensive' play; it’s a valuation-driven flight to quality as the market reprices the AI trade. With TJX at 32x and MNST at 44x P/E, these aren't cheap 'safe havens.' Investors are paying a massive premium for predictable double-digit EPS growth because the AI narrative is currently struggling to translate capex into immediate margin expansion. While the article frames this as healthy diversification, it’s actually a warning sign that the 'growth at any price' trade is exhausted. If the broader market correction accelerates, these high-multiple staples will likely face a sharp contraction as the 'quality' trade becomes crowded and overextended.
If AI infrastructure spending remains resilient, this rotation is merely a temporary consolidation before the next leg up in tech, making these staples 'value traps' that will underperform when the market resumes its growth trajectory.
"Record highs in expensive stocks during a tech selloff reflect normal rotation dispersion, not a structural shift away from AI — and the article misses that margin pressure and valuation risk are real headwinds for all three."
The article conflates a tactical rotation with a structural shift. Yes, 22 S&P 500 stocks hit 52-week highs while the index fell — but that's normal dispersion during volatility, not evidence of money 'quietly rotating.' TJX at 32x forward P/E, KO at 26x, and MNST at 44x are not cheap havens; they're expensive bets on earnings growth. The real signal: small-cap outperformance (Russell 2000) matters more than three mega-cap names hitting records. The article treats record highs as validation, but ignores that TJX and KO were already near all-time highs before this week. MNST's 27.6% EPS growth is genuine, but gross margin compression (55% vs 56.5%) and aluminum costs are headwinds the article downplays.
If AI capex is genuinely peaking and tech multiples compress 15-20%, defensive earnings compounders like KO (64-year dividend streak) and high-growth consumer plays like MNST could sustainably outperform for 12-24 months, making current valuations justified on a relative basis.
"High multiples on proven EPS growth are less fragile than Gemini claims when small-cap breadth fails to hold."
Gemini treats 32x and 44x multiples as proof of exhaustion, but that ignores how TJX and MNST's double-digit EPS beats already embed the premium. Claude flags MNST margin pressure correctly, yet aluminum is a pass-through that volume can offset. The overlooked link is Russell 2000 strength: if it proves fleeting, capital may stay in these compounders rather than rotating back to AI names whose capex-to-revenue conversion remains unproven.
"High multiples on TJX/MNST leave little cushion for macro/AI capex shocks; this rotation may be temporary, not a durable leadership shift."
Gemini’s claim that this is a valuation-driven flight to quality risks underestimating macro sensitivity. A 32x/44x multiple on TJX and MNST leaves little cushion if AI capex slows, rates rise, or consumer growth deteriorates. This could be a liquidity bid that reverses quickly, not a durable shift. The panel should test: what happens to these names if dispersion widens again or if Russell 2000 gains fade and AI momentum stalls for 6–12 months.
"The current rotation into high-multiple staples is a crowded liquidity trade that lacks the margin of safety required for a defensive rotation."
Gemini and ChatGPT are missing the liquidity trap risk. These multiples aren't just 'quality' premiums; they are a byproduct of index-tracking inflows as investors exit high-beta tech. If the Russell 2000 fades, this capital won't return to AI—it will evaporate into cash. Claude is right to flag margin compression; at 44x, MNST cannot afford even minor cost-of-goods-sold headwinds. We are seeing a crowded trade in 'defensives' that are actually priced for perfection.
"Passive inflows into mega-cap defensives don't automatically reverse if small-cap momentum fades—the two flows operate on different mechanics."
Gemini flags the liquidity trap correctly, but conflates two separate risks. Index-tracking inflows into mega-cap defensives (TJX, KO) differ fundamentally from Russell 2000 strength—one is passive rebalancing, the other is active risk-on. If Russell fades but TJX/KO earnings hold, these names can sustain 28-32x multiples on fundamentals alone. The real test: does consumer spending data deteriorate? That kills both narratives. Nobody's modeled Q3 guidance revisions yet.
The panel discusses a potential rotation into consumer staples and retail stocks like TJX, KO, and MNST, driven by strong earnings and defensive characteristics. However, the high valuations (32x, 26x, 44x) and macro risks suggest this could be a crowded trade that may reverse if AI earnings disappoint or macro conditions deteriorate.
Strong earnings and defensive characteristics may continue to attract investors seeking stability.
High valuations and macro risks could lead to a reversal in the upmove of these stocks.