Investors are piling into tech stocks and shrugging off the debt-ceiling drama, Bank of America survey shows
- Fund managers' allocations to tech stocks have hit a 17-month high, according to Bank of America.
- The sector has embarked on a breakneck early-year rally, with the Nasdaq up 19% in 2023.
Investors are loading up on tech stocks as the sector surges, thanks to expectations of a Federal Reserve pivot and the craze around artificial intelligence and ChatGPT, a new Bank of America survey has found.
The bank polled 289 fund managers with over $750 billion worth of assets, and found the amount of their portfolio allocated to tech rose to a 17-month high last week, while allocations to stocks hit a five-month high.
Being "long big tech" was also the most crowded trade amongst the fund managers surveyed, according to BofA.
The investors' move into tech stocks comes with the sector in the midst of a breakneck rally.
The surge in popularity of intelligent language tool ChatGPT has boosted the share price of companies like Microsoft, Alphabet, and semiconductor chipmaker Nvidia. Tech stocks have also benefited from hopes that the Fed will soon wind down its war on inflation.
The tech-heavy Nasdaq Composite has rebounded from a hellish 2022 to log a 19% gain in under five months. Two stocks – Nvidia and Facebook parent Meta Platforms – have already seen their share prices double this year.
Bank of America's latest survey also showed that the fund managers it spoke to aren't worried about the debt-ceiling deadlock, as talks between the Biden administration and the Republican-led House of Representatives rumble on.
About 71% of respondents believe the two sides will reach an agreement to raise the US government's borrowing limit before the so-called "X-date" when it would run out of money to repay its debts.
Read more: Wall Street is bracing for stock market chaos as the debt-ceiling face-off drags on