Hedge funds are dumping tech stocks at the fastest pace in 2 years
Big investors don’t like tech too much right now. Data compiled by Bank of America shows hedge funds and other large investors are dumping tech stocks at the fastest pace since July 2023. Specifically, the bank looked at net buying and selling activity within the sector on a weekly basis as a percentage of market capitalization. BofA added that net technology single stock sales topped $5 billion last week, by far the S & P 500 sector with the most selling. Those sales have been reflected in the broader market’s recent moves. The S & P 500 fell more than 1% on Tuesday even after Palantir Technologies reported better-than-expected quarterly results. Analysts and investors alike noted the company’s lofty valuation is hard to digest, even after the strong report. .SPX 5D mountain SPX 5-day chart “The last 24 hours have brought a clear risk-off move, as concerns over lofty tech valuations have hit investor sentiment,” wrote Deutsche Bank strategist Jim Reid. “Whilst the moves were only one day’s selloff, the market narrative saw a discernible shift, with a growing chorus discussing whether we might be on the verge of an equity correction.” “That speculation has gathered pace over the last month in particular, mainly because the Magnificent 7 has diverged from the rest of the S & P 500, which has revived questions about how concentrated this equity market now is. Indeed, whilst the Mag 7 have been advancing in recent weeks, the equal-weighted S & P 500 actually fell in October for the first time in 6 months,” Reid said. Wall Street is attempting to rebound Wednesday, but valuation worries persist after AMD ‘s latest quarterly release. The maker of chipsets and other microprocessors beat analysts’ earnings and revenue estimates in the third quarter. But profit margin guidance only matched analyst expectations, leaving investors wanting more. On top of that, the stock trades at 41 times forward earnings, far above the S & P 500’s 23 multiple.
