The 'richest' S&P sector valuation due to AI? It might be industrials

Watch on YouTube ↗  |  July 26, 2026 at 14:20  |  2:20  |  CNBC
Speakers
Brian Sullivan — Anchor, CNBC (Last Call / Power Lunch)

Summary

The industrial sector's P/E has risen to tech-like levels, powered by AI data center infrastructure buildout and defense tailwinds, drawing strong fund flows into ETFs like XLI. The host adds that insurers and reinsurers may find growth opportunities covering data center projects amid a capital shortfall.

  • S&P 500 industrial sector P/E now rivals technology, driven by AI data center infrastructure needs.
  • XLI ETF has experienced elevated valuations and robust investor inflows.
  • Defense spending and geopolitics provide additional support to industrial stocks.
  • Active flows represent 34% of the $17 billion going into industrial funds.
  • Insurers are eyeing data center construction and operation for new coverage opportunities.
  • A global reinsurer CEO warned of insufficient capital to handle data center projects, signaling opportunity.
  • Security and resilience themes are expected to grow in importance for infrastructure.
Ideas
Cynthia 0:18
Industrials lifted by AI infrastructure, defense
The industrial sector, as captured by the XLI ETF, is a core AI infrastructure play, driven by data center buildout and energy grid expansion, and further supported by geopolitical defense spending. This has pushed valuations to tech-like levels, attracted strong investor flows, and created sustained tailwinds for the sector.
XLI MED
Brian Sullivan Anchor, CNBC (Last Call / Power Lunch) 1:39
Insurers benefit from data center coverage gap
Insurers and reinsurers stand to benefit from the massive data center buildout, as they provide coverage from construction through operation, while a global reinsurance CEO notes insufficient capital in the space to handle projects, creating opportunity for future growth in insurance and reinsurance.
Insurance & Reinsurance LOW
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This CNBC video, published July 26, 2026, features Cynthia, Brian Sullivan discussing XLI, Insurance & Reinsurance. 2 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Cynthia, Brian Sullivan  · Tickers: XLI, Insurance & Reinsurance