Shun mega-cap tech stocks as a 'big asset bubble' is building in growth shares, Bank of America's top strategist says

• Investors should avoid piling into mega-cap tech stocks, according to BofA's Savita Subramanian.
• "You don't want to buy mega-cap tech. That's old leadership," she said.

Avoid piling into mega-cap technology stocks as a slowdown in post-COVID tech demand hasn't been priced in yet, according to Bank of America's head of US Equity and Quantitative Strategy.

Speaking in a CNBC interview on Thursday, BofA's Savita Subramanian pushed back against the current market trend of investors loading up on Big Tech shares as they turn more bearish about the broader stock market.

"You don't want to buy mega-cap tech. That's old leadership," Subramanian said, adding that tech is showing its cyclicality in today's environment.

"When you think about what we all spent on over the last two years was tech, because we couldn't go out, we couldn't do anything. So, companies, consumers spent on tech, and now, we're seeing demand pulled forward during COVID, 2021 and 2022, turn into declining sales volume. I think that's something that's not been priced into technology stocks," she said.

Tech stocks have kicked off 2023 with a bang, with Big Tech shares including Meta and Amazon stock soaring in price. The gains were largely down to the industry's exposure to artificial intelligence, which has seen a surge in popularity among investors following the rise of OpenAI' human-like large language tool, ChatGPT.

While Subramanian noted that AI is a bullish pocket of the tech industry, she suggested it's not a convincing enough driver for mega-cap tech stocks.

"We're in a market environment where the big asset bubble is in long-duration growth stocks," she added.