Bank of America survey shows 80% of institutional investors are overweight semiconductors, signaling potential overstretch risks.
Institutional fund managers have piled into semiconductor stocks at record levels, with 80% reporting an overweight position in the sector, according to the latest Bank of America Global Fund Manager Survey. The trade is now the most crowded on record, surpassing prior peaks in tech and growth stocks during past market cycles.
The survey, which polled managers overseeing hundreds of billions in assets, also revealed rising optimism about global growth, with only 1% expecting weaker economic activity over the next year. Inflation concerns have eased, though tail risks like a second inflation wave or an AI bubble remain on the radar. Interest rate expectations are at their highest since September 2022.
While 56% of managers still view the AI sector as being in a boom phase, 21% describe sentiment as approaching “euphoria,” a potential warning sign for market stability. The survey serves as a contrarian indicator, with extreme positioning often preceding sharp reversals.