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Tech Shares See Biggest Ever Weekly Inflows as Investor Interest in AI Surges

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Nimrah Khatoon
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Tech shares see $8.5 billion of weekly inflows which is the biggest-ever weekly inflow on AI boom.
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Image Credit: REUTERS/Ann Wang

Record Inflows into Technology Equity Funds

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Technology equity funds experienced their largest weekly inflows on record in the week leading up to Wednesday, as reported by BofA. This surge in investor interest in artificial intelligence (AI) resulted in $8.5 billion of inflows into tech stocks, as reported by market data provider EPFR. Overall, stocks received $14.8 billion of inflows, marking the largest weekly inflow since February. The Nasdaq and S&P 500 reached nine-month closing highs on Thursday, indicating a positive sentiment toward the tech sector.

Market Concentration Raises Concerns

A significant factor contributing to the upsurge in technology stocks was the 30% rise in shares of chipmaker Nvidia, which briefly pushed its market valuation above $1 trillion. Bank of America analysts described the current trend as a "summer rip tide into tech and stocks" and referred to it as an AI "baby bubble." However, they remained bearish due to the potential impact of higher interest rates on liquidity. Despite this, investors are gravitating toward the largest companies with substantial margins and price-to-earnings multiples.

BofA's calculations reveal that seven stocks, including Apple, Microsoft, Google parent Alphabet, Amazon, Nvidia, Meta, and Tesla, account for 8.8 percentage points of the S&P 500's year-to-date return. While this concentration has driven the market rally, it raises concerns about the overall health of the market and the potential for increased volatility if investors decide to divest from these megacap holdings.

Interestingly, cash funds, typically sought after during periods of investor nervousness, also experienced inflows of $11.3 billion for the sixth consecutive week. Meanwhile, gold funds saw $200 million of outflows, suggesting a shift in investor sentiment.

ArtificialIntelligence MarketTrends TechStocks InvestorInterest RecordInflows
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