Coca-Cola and Hershey Shine as AI Trade Loses Luster

Consumer staples are an attractive alternative to the AI trade for investors looking for sector rotation. The Consumer Staples Select Sector SPDR Fund (XLP) is up about 10% year-to-date, a lower return than the broader market but potentially indicating that the rotation has further to go. Two stocks in this sector stand out: Coca-Cola and Hershey.

Coca-Cola's second-quarter results showed its World Cup activation working as intended, with net revenues growing 7% to $13.4 billion. The company credited the tournament's over 60 billion digital impressions and connected-packaging engagement with more than 80 million consumers for a meaningful share of that growth. However, some investors may be questioning the durability of these results.

Hershey delivered a strong Q2 2026 earnings report due in part to its investment in its salty snacks business. Revenue beat expectations, and adjusted EPS jumped 57% year-over-year. The company's focus on salty snacks contributed significantly to this growth, as well as lower cocoa prices. Coca-Cola and Hershey offer two different ways to play the consumer staples rotation: global scale and marketing strength for Coke, versus a higher yield and improving margins for Hershey.