Investors are experiencing a serious case of FOMO when it comes to tech stocks, and it’s driving their investment decisions. According to a recent note from Bank of America’s head US equity strategist, Savita Subramanian, the last two years of impressive gains from tech giants have convinced investors that tech is the sector to be in, or risk being left behind.
Tech stocks have been dominating the market, with nine out of the top 10 spots for stocks with the biggest increases in ownership from long-only active mutual funds being tech companies. The outlier was Eli Lilly, a major player in the booming weight-loss drug market. However, even weight-loss drugs are being seen as a close cousin to the tech-centric innovation that investors are flocking to.
Nvidia is currently the most popular stock among funds, with over 68% of funds holding shares. Broadcom saw a significant increase in fund ownership over the past year, going from 26% to 45%. The correlation between the number of “AI” mentions on earnings calls and the change in percent of funds owning each stock is clear, highlighting the tech trend that investors are following.
Tech companies, especially those focused on AI, are seen as the future of innovation and productivity. While Big Tech companies are enjoying positive earnings estimate revisions, other non-megacap companies are facing cuts. However, “old economy” stocks are also benefiting from AI, with companies on both the supply and demand side reaping the rewards of increased productivity.
Overall, investors are eager to jump on the tech bandwagon and not miss out on the next big wave of innovation. While the market may currently feel narrow with the focus on tech, the use of AI across various industries is expected to broaden the market in the future. Investors are keeping a close eye on tech stocks and the latest technology news that could impact the stock market.
