What are active managers doing these days? Buying AI says BofA

May 25, 2024 12:22 AM AEST | By Investing

Google News:

What are active managers doing these days? Buying AI says BofA

Recent News

Fed keeps rates steady, but sees fewer cuts next year on stagflation c...

AM Best Affirms Credit Ratings of Guild Insurance Limited

BofA starts Sandisk at Buy on margin upside, NAND recovery prospects

Hackers destroy $90 million in attack on Iranian crypto exchange

AI and technology stocks are now core holdings among active funds, strategists at Bank of America (NYSE:BAC) said in a Friday note.

“We screened the S&P 500 for stocks that saw the largest increase in ownership breadth over the last 12 months (measured by the percent of funds owning each ticker). Unsurprisingly, nine of 10 stocks on our list are AI or Tech-related,” strategists wrote, with the only exception being pharma giant Eli Lilly and Company (NYSE:LLY).

This trend is further supported by a positive correlation between the number of "AI" mentions on earnings calls and the change in fund ownership for these stocks, BofA added.

The note also reveals that NVIDIA Corporation (NASDAQ:NVDA) has become a key holding, owned by 68% of funds and overweight by approximately 50%. According to BofA’s team, the company’s post-earnings 10% jump in the face of a broader market decline indicates that the stock welcomed even more new buyers.

“The market continues to feel narrow, especially with positive YTD revisions for the Mag 7 and cuts for the remaining 493,” strategists said.

“But we also see beneficiaries of AI in less crowded "old economy" stocks, where we expect re-rating in labor-intensive services stocks' multiples as they grow more efficient via AI/automation,” they added.

In addition to AI, the report highlights a growing bias among long-only funds towards stocks with high projected long-term growth (LTG) over those with high dividend yields. The aggregate dividend yield of these funds' holdings is now near a record low compared to the S&P 500.

BofA believes this shift could pose a risk to fund performance, as high dividend yield stocks might lead the market.

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.