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Fund managers reduce AI exposure as AI bubble fears rise
Bank of America’s August survey found semiconductor bets fell from 82% to 53% in one month, while about 59% of fund managers increased allocations to value, cyclical, and defensive sectors.
Bank of America’s August survey shows fund managers are increasingly concerned about an AI bubble, with about 32% calling it the biggest market risk, ahead of geopolitical turmoil and inflation risk, according to LiveMint Markets.
The survey also points to a pullback in crowded trades tied to AI, noting semiconductor exposure among fund managers dropped sharply from 82% to 53% within a month.
Instead of adding to AI-related positions, about 59% of fund managers said they are shifting toward value, cyclical, and defensive sectors to limit exposure to a potential AI downturn.
Beyond the US, the survey found nearly two-thirds of investors want clearer evidence of AI monetization before increasing AI stock exposure, and many participants favored European equities, with 47% expecting European stock returns to modestly outpace the US over the coming year.