Money managers are piling into technology stocks at levels not seen since the early pandemic recovery, even as nearly half expect an artificial intelligence bubble to arrive within the year. A Bank of America survey conducted October 2–8 found that 37% of fund managers now hold an overweight position in tech, up from 30% the previous month and the highest reading since August 2020. The poll captured responses from 161 managers controlling $453 billion in assets.
The jump in tech exposure reflects managers chasing gains from artificial intelligence, which has driven the S&P 500 roughly 120% higher over a four-year bull run. Yet optimism is tempered by growing doubt: 45% of those surveyed believe an AI bubble will emerge in 2027, while 42% disagree. Meanwhile, participants identified global semiconductor stocks as the most crowded trade at present. On the bonds front, sentiment turned to the least pessimistic since May 2025, with 37% saying they would shift from stocks into fixed income if the 10-year Treasury yield hit 6%, and about 19% reporting they've already begun that rotation. The 10-year yield stood at 5.19% Tuesday morning.
The survey highlights how positioning extremes create risk in crowded trades. Some of the AI-driven enthusiasm is fading as investors question whether future earnings will justify the massive spending on artificial intelligence infrastructure. On Tuesday, steep declines in South Korean memory chipmakers Samsung Electronics and SK Hynix pulled a major Asia equity index to its weakest point since August, while Nasdaq 100 futures slipped 0.6% the same session.
The tension between tech momentum and climbing bond yields now shapes the backdrop for everyday portfolios, the report notes, because it influences everything from stock valuations to how appealing a traditional bond appears compared to a favorite growth stock. When everyone owns the same sector, the exit narrows. The combination of record-high tech concentration and split expectations on an AI bubble suggests managers are weighing short-term gains against the risk of a sharp reversal if sentiment shifts or if AI spending fails to deliver commensurate profit growth. For investors navigating this environment, the interplay between equity crowding and rising yields will determine whether the AI trade sustains its rally or hits a wall. Sentiment alone won't predict the timing, but positioning this lopsided rarely unwinds gently.