The S&P 500 is up 13.9% this year. The same 500 stocks held in equal weights are up 10.0%. Over three years, it’s 79.7% versus 49.5%. (SPY vs. RSP)
That gap is the Magnificent Seven. A few giant companies now drive most of what the index does, and most of what they do rides on one bet: AI spending.
If you own an S&P 500 fund, you own that bet whether you meant to or not.
So I looked at the other side. I screened 18 well-known quality companies whose earnings don’t depend on AI spending and kept only the ones I’d be comfortable owning for five years: a durable advantage, management I trust, and earnings that are still growing. Here are five.
The five at a glance
Here's what each company sells and how its price today compares with its own recent history.
Intuitive Surgical (NASDAQ: ISRG): surgical robots. About 47x earnings vs. a 5-year average of about 73x.
Ferrari (NYSE: RACE): sports cars. About 37x earnings vs. a 5-year average of about 44x.
Cintas (NASDAQ: CTAS): uniforms and workplace supplies. About 39x earnings vs. a 5-year average of about 40x.
O’Reilly Automotive (NASDAQ: ORLY): auto parts. About 27x earnings vs. a 5-year average of about 26x.
TJX Companies (NYSE: TJX): off-price retail. About 26x earnings vs. a 5-year average of about 28x.
Prices and PE Data as of Oct. 7, 2026.
Bargains vs. broken
Plenty of quality stocks got cheaper this year. Some got cheaper because they weren’t part of the AI trade. Others got cheaper because the business got worse. You want the first kind.
Two that look cheap but didn’t make the list:
Zoetis (NYSE: ZTS): about 12x earnings, but Q2 revenue was flat, pricing power is slipping, and key patents expire in 2030 and 2032.
Tractor Supply Company (NASDAQ: TSCO): two straight earnings misses, a lowered outlook, and Q2 EPS down 15%.
The five below all grew earnings this year. Four of them trade well below their 52-week highs anyway.
Intuitive Surgical (ISRG)
Intuitive makes the da Vinci surgical robot. Hospitals buy the system once, then buy instruments and service for every surgery performed on it, for years.
Why it’s here: Surgeries don’t care how much anyone spends on data centers. Demand comes from aging patients and surgeons who trained on da Vinci and don’t want to switch.
Where it’s strongest:
Competitive Moat: Every installed system and every trained surgeon makes the next sale easier and a rival’s harder.
Financials and Efficiency: No meaningful debt. Q2 revenue rose 18.5% to $2.89 billion, and EPS rose 30% (10-Q, July 21, 2026). Free cash flow was about $3.2 billion over the past year.
The risk: It’s still the priciest stock on this list. Procedure growth is expected to slow, hospitals are tightening budgets with rates this high, and competing robots are coming. Stock-based pay also runs near 7.5% of revenue, which dilutes shareholders.
Valuation: About 47x earnings, against a five-year average near 73x. The stock is down 32% from its high ($411.85 vs. $603.88). That’s cheap for Intuitive, but not cheap in general.
Ferrari (RACE)
Ferrari builds a small number of very expensive cars and deliberately makes fewer than people want. The waitlist is the business model.
Why it’s here: Ferrari’s earnings depend on wealthy people wanting Ferraris. That has nothing to do with GPUs.
Where it’s strongest:
Competitive Moat: Scarcity is the strategy, and no amount of money can recreate the brand.
Business Quality: Q2 revenue rose 8.2% to about $2.17 billion, EPS rose 9.7%, and operating margin was about 32% (6-K, July 30, 2026; euros converted to USD at the Oct. 7 rate of 1.12). That’s a software-like margin from a carmaker.
Management is also buying back about $3.9 billion of stock through 2030 (company statement, Sept. 2026, converted from euros).
The risk: Luxury is weak. UBS says the luxury sector is down 23% this year, though Ferrari has held up (via Proactive Investors, Oct. 5, 2026). The first electric Ferrari is coming, and a misstep there would hurt the brand. U.S. investors also carry currency risk, since Ferrari reports in euros.
Valuation: About 37x earnings, against a five-year average near 44x. The stock is about 21% below its high. Fair, not a bargain, for a business this rare.
Cintas (CTAS)
Cintas rents and cleans work uniforms and keeps businesses stocked with first aid kits, restroom supplies, and fire extinguishers. Same trucks, same routes, every week.
Why it’s here: Cintas doesn’t sell to consumers. It sells to the businesses that employ them. Growth comes from adding stops to routes it already drives, and its main competitor is usually a business doing the work itself.
Where it’s strongest:
Business Quality: Each new customer on an existing route is very profitable because the truck was already going there. Fiscal Q1 revenue rose 10.9% to $3.01 billion, with an operating margin of about 24% (10-Q, Sept. 23, 2026).
Management Quality: Few companies have compounded this steadily. Operating margin rose from about 20% in fiscal 2022 to about 23% in fiscal 2026.
The risk: Cintas grows with jobs. A recession that cuts payrolls hits it directly, and youth unemployment is already rising. You’re also paying full price for the quality.
Valuation: About 39x earnings, right at its five-year average of about 40x. It’s here because it’s one of the most dependable compounders around, at a price that isn’t stretched against its own history.
O’Reilly Automotive (ORLY)
O’Reilly sells auto parts to repair shops and to people who fix their own cars. The edge is having the right part close by, fast.
Why it’s here: Americans are keeping cars longer. With new car prices and loan rates where they are, fixing the old car usually beats buying a new one.
Where it’s strongest:
Management Quality: Consistent execution and aggressive buybacks. The share count fell about 3.8% in a year (10-Q, Aug. 7, 2026).
Business Quality: O’Reilly sells most parts before it has to pay suppliers for them, so its suppliers effectively fund the inventory (cash conversion cycle around negative 48 days). Q2 revenue rose 8.1% to $4.89 billion, EPS rose 10%, and return on invested capital is about 34%.
The risk: Electric cars need fewer replacement parts, which is a slow but real headwind. The buybacks have also left net debt at about 2.3x EBITDA, so the balance sheet is less forgiving than the business.
Valuation: About 27x earnings, a touch above its five-year average of about 26x, but below the 29x to 31x of the last two years. The stock is 22% off its high. A small premium is fair for double-digit EPS growth.
TJX Companies (TJX)
TJX runs T.J. Maxx, Marshalls, and HomeGoods. It buys extra inventory from brands and other retailers, then sells it for less.
Why it’s here: It tends to do better when people feel squeezed. With confidence weak and gas prices high, more shoppers trade down, and TJX is the biggest and best at catching them.
Where it’s strongest:
Financials and Efficiency: Fiscal Q2 revenue rose 5.4% to $15.18 billion, but EPS jumped 24% as pretax margin widened to about 13.3% from 11.4% (10-Q, Aug. 28, 2026). Return on invested capital is about 23%.
Competitive Moat: A buying network spanning thousands of vendors. When a brand has too much stock, TJX is usually the first call.
The risk: Off-price needs other retailers to overbuy. If they keep inventory lean, TJX has less to sell. Tariffs on apparel could also eat into this year’s margin gains.
Valuation: About 26x earnings, below its five-year average of about 28x, and 18% under its high, after one of its best quarters in years. Of the five, this is the clearest case of the price lagging the business.
What would change my mind
Growth stalls. Two or more quarters of flat earnings would put any of these in the Zoetis bucket: cheap for a reason.
A real recession. Cintas and TJX are the most exposed to job losses and spending cuts.
Prices outrun earnings. If these stocks rerate to old premiums without the growth to match, the margin of safety is gone.
AI reaches them after all. Rollins, the pest control company, blamed volatile sales leads on changes in AI search. “Nothing to do with AI” can stop being true fast.
The concentration trade keeps winning. It has for three years. Owning outside it has a real cost, and I won’t pretend otherwise.
The bottom line
I’m not saying the Magnificent Seven will fall or that these five will beat them. Nobody knows that.
What I am saying is that an index fund in 2026 carries more single-theme risk than most people realize. These five companies make money from surgeries, sports cars, uniforms, brake pads, and discount handbags. None of that depends on how many chips get bought next year.
A theme is a lens, not a timing signal. This one just helps you see what you own, and what you might want to own alongside it.
Long-term conviction, not short-term noise.