Key takeaways
- Technology funds lose $4.75 billion despite broader inflows
- Global equity funds attract $20 billion in one week
- Analysts still forecast 46.9% technology-sector earnings growth
Global technology funds suffered $4.75 billion in investor withdrawals as concerns about artificial intelligence spending intensified, even while investors poured more than $20 billion into stock funds worldwide.
LSEG Lipper data showed global equity funds attracted $20.01 billion during the week ending October 14, compared with just $1.59 billion in the previous week.
The divergence suggests investors remain interested in equities but are increasingly selective about exposure to AI-related companies, particularly those facing expensive infrastructure investments and rising debt obligations.
Technology Funds Lose $4.75 Billion as Global Stock Inflows Accelerate
Global equity funds recorded their fourth consecutive week of inflows, supported by expectations of strong corporate earnings and a retreat in government bond yields.
US equity funds led the recovery, attracting approximately $13 billion after losing $5.1 billion the previous week. Asian funds gained $2.93 billion, while European funds received another $1.5 billion.
However, sector-focused equity funds moved in the opposite direction.
Technology funds recorded $4.75 billion in withdrawals, while industrial funds lost $1.86 billion and financial-sector funds shed another $1.43 billion.
Combined net outflows across sector funds reached $6.14 billion.
The contrast is important because broad stock funds include technology companies alongside banks, healthcare businesses and other sectors.
Their inflows do not prove that every sector outside technology attracted money, nor do they establish that withdrawn technology investments were directly transferred into other equity funds.
Nevertheless, the figures reveal a shift in investor preferences during a week of heightened concern about AI valuations.
Why Are Investors Selling AI Stocks Despite Strong Earnings Forecasts?
The withdrawals come despite expectations of substantial profit growth across the technology industry.
LSEG estimates that technology-sector earnings will increase 46.9% year over year for the latest quarter, considerably faster than the 25.14% growth projected for global large- and mid-cap companies.
Yet strong earnings expectations have not protected semiconductor stocks from selling pressure.
ICD recently reported that AI chip stocks lost approximately $1.64 trillion in market value over six trading sessions, affecting Nvidia, AMD and Micron.
Investors are increasingly questioning whether the enormous capital required for AI infrastructure will generate sufficiently attractive returns.
The issue is particularly visible among companies financing GPU purchases and data-center construction through substantial borrowing.
CoreWeave’s default insurance costs recently exceeded 1,000 basis points, indicating growing concern about credit risk in the AI infrastructure sector.
Higher financing costs could make future expansion less profitable, even if demand for computing capacity remains strong.
[CHART — PLACE HERE: “Technology Fund Flows Reverse”]
Compare technology fund inflows of $5.37B in the week ending October 7 with outflows of $4.75B in the week ending October 14.
Can Lower Treasury Yields Support the Stock Market?
One factor supporting broader equity demand has been the recent recovery in government bonds.
The US 10-year Treasury yield reached 5.3645% last week, its highest level in approximately 24½ years, before retreating around 26 basis points.
Lower bond yields can reduce pressure on equity valuations, particularly for growth companies whose expected profits lie further in the future.
Global bond funds attracted another $7.79 billion during the reporting week, suggesting demand for fixed-income investments remained strong.
Meanwhile, investors withdrew $46.73 billion from money market funds, partly reversing the previous week’s substantial inflows.
The latest figures reinforce an important distinction between investors financing AI infrastructure and the companies receiving that spending.
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