July 2025 S&P 500 Movers: AI-Driven Gainers vs. Struggling Traditional Sectors

The S&P 500 in July 2025 painted a stark contrast between the explosive growth of AI-driven stocks and the stagnation—or outright decline—of traditional sectors like retail and industrials. While the index hit record highs, the median stock lagged 10% below its 52-week peak, signaling a narrow rally led by a handful of megacap and AI-linked names. For investors, this divergence offers a critical inflection point: identifying strategic entry points in AI and energy stocks while navigating risks in underperforming sectors.

AI and Energy: The New Engines of Growth

The AI sector's dominance in July 2025 was driven by a trifecta of innovation, demand, and strategic positioning. Nvidia (NVDA) and ASML (ASML) emerged as cornerstones of this boom. Nvidia's Blackwell platform, launched in 2025, solidified its role as the semiconductor backbone of AI, with data center revenue surging 114% year-over-year. ASML's EUV lithography machines, critical for manufacturing advanced AI chips, saw net sales jump 34% in Q2 2025, despite temporary headwinds from delayed projects.

Meanwhile, Taiwan Semiconductor Manufacturing (TSMC) reported a 44% revenue increase in Q2 2025, leveraging its 90% share of AI chip production. Its forward P/E of 25 and projected 20% CAGR make it a compelling long-term play. In the energy space, Ameren Corp (AEE) shone with a 6-8% annual earnings growth outlook, driven by $63 billion in infrastructure investments. Its 22.55 P/E and low volatility (beta of 0.5) position it as a defensive energy pick.

Retail and Industrial: A Cautionary Tale

The retail sector's struggles were epitomized by Elevance Health (ELV), which plummeted 12.2% in July after slashing its full-year forecast due to cost overruns. The broader healthcare sector faced a double whammy: pandemic-era demand for diagnostics (e.g., Abbott Laboratories (ABT)) waned, and insurers grappled with regulatory headwinds. Industrial giants like GE Aerospace (GE) also faltered, with shares down 2% despite strong Q2 results, reflecting investor skepticism about long-term growth.

The industrial sector's woes were compounded by geopolitical tensions and trade uncertainties. The ISM Services Index, which covers 80% of the U.S. economy, entered contraction territory, signaling weakening demand. Companies like Union Pacific (UNP) faced mixed reactions as merger speculation clouded strategic clarity.

Strategic Entry Points: Balancing Risk and Reward

For AI and energy stocks, valuation metrics and momentum suggest selective optimism:
- ASML (ASML): At 26x forward earnings (vs. a 5-year average of 42x), its undervaluation aligns with long-term AI infrastructure demand. A dip in Q2 sales from delayed projects may present a buying opportunity.
- TSMC (TSM): Its 25x forward P/E and 44% revenue growth in Q2 2025 make it a high-conviction play, particularly for investors betting on AI-driven semiconductors.
- Ameren Corp (AEE): With a 22.55 P/E and 9.2% annual rate base growth, it offers a blend of stability and growth in an energy transition era.

Conversely, underperforming sectors like retail and industrial require caution. For example, Elevance Health (ELV) trades at a discount to its intrinsic value but carries significant operational risks. Similarly, GE Aerospace (GE)'s 2% share decline in July, despite strong earnings, highlights the sector's vulnerability to macroeconomic shifts.

Conclusion: Navigating the July 2025 Landscape

The July 2025 S&P 500 underscores a fundamental shift: AI and energy stocks are redefining the market's trajectory, while traditional sectors grapple with structural challenges. For investors, the key is to allocate capital to high-growth, strategically positioned AI and energy names while avoiding overexposure to underperforming retail and industrial stocks.

In this environment, patience and precision are paramount. AI-driven companies like ASML and TSMC offer compounding potential, while energy stocks like Ameren Corp provide resilience. Meanwhile, underperforming sectors demand rigorous due diligence, as their recovery paths remain uncertain. As the AI revolution accelerates, those who align their portfolios with innovation stand to reap outsized rewards.