After years of focusing on the wild growth that tech stocks have been delivering, there is a growing movement as investors change course. There is no question that tech has seemingly delivered endless growth, but concerns about overvaluation are prompting investors to look elsewhere.
In tech’s place, energy and industrial stocks are continuing to grow in popularity, as they feel like a new defensive core for investors who value consistent income and tried-and-true business models.
What’s more notable is that large investors and hedge funds are showing that things like renewable energy companies are smart investments for the future.
The Movement Away from Tech Stocks
It’s hard to argue against the idea that starting in the early 2010s, and moving into the 202s, technology has been the seemingly unstoppable engine of market turns. However, in 2025, investors have also begun to notice that the Federal Reserve’s rate path is growing murkier and that expectations have started to fade in the tech world, leading investors to find fewer and fewer reasons to stay overweight in tech stocks.
The Invesco QQQ Trust (NASDAQ:QQQ), one of the most popular ETFs backed by some of the biggest names in tech, has started to see some drag as names like Microsoft and Meta waver in returns. The Invesco QQQ Trust is made up of many great companies, but it is also heavily reliant on long-term growth assumptions, which are starting to look shakier than they have in recent years, even against its $2.84 annual dividend payout.
For income investors, the math in the tech world isn’t adding up like it used to, as the average tech dividend is hovering under 1%, while the energy and industrial sectors offer 3-5% dividend yields. The lack of a dependable income means that staying in tech means that you are placing your bets on price appreciation in this increasingly uncertain market.
Energy and Industrial Stocks Step Into the Spotlight
While tech has long had the spotlight, you have to contrast the past with the future: energy and industrial stocks and ETFs are not promising viral innovations or trillion-dollar valuations. Instead, they are focused on delivering cash flow, pricing power, and predictable dividends.
As it stands, energy has been a bright spot in 2025, especially in late 2025, as rising oil prices, resilient demand, and an ongoing focus on energy security have helped push up funds like the iShares U.S. Energy ETF (NYSE:IYE) and Energy Select Sector SPDR Fund (NYSE:XLE), with the latter paying a $2.88 annual dividend in 2025, perfect for income investors. While both of these ETFs are only hovering around a 4% return in 2025, they are poised for a breakout in 2026 and beyond as a potential AI bubble brings tech valuations back down to Earth.
The same goes for names like ExxonMobile and Chevron, two dividend stalwarts that are generating record cash flow amounts and returning billions to shareholders through dividends and buybacks.
Additionally, names like the Industrial Select Sector SPDR (NYSE:XLI) have returned 17.7% in 2025 and, like its energy counterparts, remain poised for meteoric growth in the future. Add in a $2.14 annual dividend paying out quarterly, and income investors are loving the combination of growth and passive income. Made up of companies tied to manufacturing, defense, and infrastructure spending, these ETFs are benefiting from reshoring trends and a massive government push to invest in U.S. production capacity.
Together, these two sectors are giving investors something that tech stocks can’t right now: income stability with real-world exposure.
The Policy and Tariff Undercurrent
There are also two more reasons investors are shifting away from high-flying growth stocks in the tech world: politics and policy risk. Steep U.S. tariffs on renewable components and rare earth minerals, which range from 25% to 200%, have helped squeeze energy firms’ profit margins. The Inflation Reduction Act’s delayed funding has also frozen billions in potential projects, leaving clean-energy names more exposed to execution risks than more traditional energy and industrial names.
As a result, you have energy companies that have traditional assets and cash flow looking far more attractive than speculative clean-tech plays. Ultimately, the market is rewarding stability and punishing uncertainty, a trend that isn’t likely to go anywhere anytime soon.
Meanwhile, you have industrial firms benefiting from infrastructure and defense spending increases, with billions being poured into transportation, semiconductor, and manufacturing projects.
Choose Income Over Innovation
I believe it should go without saying that on paper, tech companies are more innovative, but making the move to energy and industrial stocks doesn’t mean abandoning innovation, just choosing cash flow over hype.
An investor holding a diversified income portfolio of energy, industrial, and utility ETFs is bound to continue generating a 4-6% annual yield while also delivering moderate growth. Compare this to tech-heavy funds like Invesco QQQ Trust, which only had a 0.47% yield as of November 8, 2025, and the proof is in the math, as larger yields equal more success.
None of this is to say that tech is dead or dying, on the contrary. Still, the playbook for investors is maturing as investors remember that long-term success isn’t just about growth, which has been the main story in 2025. It’s also about durability, which energy and industrial stocks can deliver in spades.