LONDON (Reuters) -Technology equity funds saw their biggest weekly inflows on record in the week to Wednesday, according to BofA Global Research data released on Friday, part of a surge of investor interest in artificial intelligence
Tech stocks saw $8.5 billion of inflows in the week, BoFa said, citing market data provider EPFR. Stocks in general saw $14.8 billion of inflows, the largest weekly inflow since February.
The Nasdaq and S&P 500 hit nine-month closing highs on Thursday. [.N]
Part of that upsurge was thanks to a 30% rise in shares of chipmaker Nvidia (NASDAQ: NVDA ) in just three sessions that pushed its market valuation above $1 trillion at one point.
Investors are chasing a "summer rip tide into tech and stocks", BofA analysts wrote in a note, which referred to an AI "baby bubble", though they said they themselves remain bearish due to the impact of higher interest rates causing liquidity to tighten.
They said the market is "bored of waiting for rates to cause recession" and so is moving back into the biggest companies which had the biggest margins and biggest price to earnings multiples.
Seven stocks - Apple (NASDAQ: AAPL ), Microsoft (NASDAQ: MSFT ), Google parent Alphabet (NASDAQ: GOOGL ), Amazon (NASDAQ: AMZN ), Nvidia, Meta and Tesla (NASDAQ: TSLA ) - account for 8.8 percentage points of the S&P 500's 10% year-to-date return, according to BofA's calculations.
This is making some investors nervous, as a rally driven by a handful of stocks raises questions about the health of the broader market and risks igniting volatility if investors ditch those megacap holdings.
Cash funds, normally in demand when investors are nervous, also saw inflows of $11.3 billion, their sixth straight week of inflows, while gold funds saw $200 million of outflows, according to BofA.
BofA suggested a contrarian trade of buying Hong Kong's Hang Seng Tech Index, which includes many big Chinese tech names, and selling the Nasdaq 100 , on hopes for a surprise stimulus from China this month.
They describe the trade as: "Buy HSI sell AI".
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.