Global fund managers' enthusiasm for tech stock allocations has climbed to its highest level since the 2020 COVID rebound, while consensus around the AI trade is quietly fracturing, with semiconductor stocks取而代之 becoming the most crowded trade.

According to the latest monthly fund manager survey from Bank of America, the proportion of respondents overweight the tech sector jumped to 37% from 30% last month, the highest since August 2020. At the same time, about 45% of respondents believe an AI bubble will emerge in 2027, while 42% disagree, highlighting clear market divergence.

The survey results were released as tech stocks come under pressure. On Tuesday, South Korean memory chip giants Samsung Electronics and SK Hynix fell sharply, dragging Asia's benchmark equity index to its lowest level since August, while futures tracking the U.S. Nasdaq 100 slid 0.6% the same day.

Tech overweight ratio hits six-year high

The Bank of America survey shows that global investors chasing the AI-driven stock market rally have pushed their overweight position in tech stocks to a six-year peak. Artificial intelligence has been the most sought-after trade theme in the stock market in recent years, driving the S&P 500 up nearly 120% over a four-year bull market.

However, as investors begin to question whether the heavy capital expenditure on AI-related technologies can deliver commensurate returns, some of the enthusiasm surrounding AI is fading. In this survey, respondents' views on an AI bubble were nearly evenly split—45% believe a bubble will form in 2027, while 42% disagree, indicating substantive disagreement over AI's long-term value.

The survey was conducted from October 2 to 8, with 161 participants responding, representing a combined $453 billion in assets under management.

Semiconductors replace AI as the market's most crowded trade

Although AI remains the core narrative driving the overall rise in tech allocations, investors' focus has shifted at the specific trade level. The October Bank of America survey shows respondents ranked global semiconductor stocks as the most crowded trade in the market, with AI concept stocks no longer独占鳌头.

This shift is already visible in market action. On Tuesday in Asian markets, sharp declines in Samsung Electronics and SK Hynix directly weighed on regional indices, underscoring the volatility risk embedded in highly concentrated semiconductor positioning. When crowded trades meet a reversal in sentiment, the correction in related assets tends to be more severe.

Bond appeal rebounds, Treasury yields become key threshold

While equity allocations heat up, pessimism in the bond market is also receding. The survey shows investors' views on bonds have fallen to their least bearish level since May 2025.

Specifically, about 37% of respondents said they would shift funds from stocks to bonds if the 10-year U.S. Treasury yield rose to 6%; another 19% said they were already making such allocation shifts. As of Tuesday morning, the 10-year Treasury yield stood at 5.19%, still some distance from the trigger threshold, but the market's sensitivity to interest rate moves is rising.