(Bloomberg) — A record share of global fund managers said artificial intelligence stocks are in a bubble following a torrid rally this year, according to a survey by Bank of America Corp.
About 54% of participants in the October poll indicated tech stocks were looking too expensive, an about-turn from last month when nearly half had dismissed those concerns. Fears that global stocks were overvalued also hit a peak in the latest survey.
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US stocks have scaled multiple records, driven by enthusiasm around AI spending and related productivity benefits. The tech-heavy Nasdaq 100 has rallied 18% this year, lifting its forward price-to-earnings ratio to nearly 28, above an average of 23 over the past decade.
That’s led some market participants to question if valuations have overshot the cohort’s earnings outlook, although Goldman Sachs Group Inc. strategists have said it’s too early to be afraid of a tech bubble.
Fund managers’ equity allocation also reflects some optimism. The BofA survey showed exposure to US stocks rose to the highest in eight months — stretching back to before tariff anxieties took hold. Worries about a recession subsided to the lowest since early 2022.
Cash holdings declined, but BofA strategist Michael Hartnett said unease over AI as well as concerns around the private credit market were tempering “full-bull” sentiment.
Renewed worries about a US-China trade war have roiled the mood more broadly in recent days. The Nasdaq 100 has led declines in the US, and futures tracking the benchmark were down about 1% on Tuesday.
The BofA survey showed an AI bubble was viewed as the biggest tail risk, followed by a resurgence in inflation and worries about the loss of Federal Reserve independence and dollar debasement.
The poll was conducted between Oct. 3 and Oct. 9, and canvassed 166 participants with $400 billion in assets.
–With assistance from Jan-Patrick Barnert.
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