Signs of the "AI bubble" bursting! Bank of America: Investors in technology stocks "sneaked" with $2 billion

Original: Finance Associated Press

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• Bank of America says Wall Street's enthusiasm for AI may be fading.
• Investors just dumped $2 billion in tech stocks, the biggest outflow in 10 weeks.
• Previously, Bank of America called AI a "baby bubble" and compared it to the dot-com boom of the 2000s.

Recently, due to the upsurge of artificial intelligence (AI), U.S. stocks have performed very well. The S&P 500 has entered a "technical bull market" in one fell swoop, and the Nasdaq has ushered in its best semi-annual performance since the Internet bubble era. However, under the superficial cheers, there is actually an "undercurrent" surging.

After a 1999 dot-com bubble-era rally, there are now tentative signs investors are fleeing tech -- the sector, Bank of America strategist Michael Hartnett said in a new note. Just saw the largest outflows in 10 weeks.

Hartnett accurately predicted the sharp drop in U.S. stocks last year and was called "the most accurate analyst on Wall Street." Previously, he called the current round of artificial intelligence rises a "baby bubble", which he warned may be bursting.

Bank of America wrote in a report, citing data from EPFR Global, that in the five trading days to June 21, the technology sector saw $2 billion in outflows, the largest outflow in 10 weeks. **

That suggests investors are fleeing after the Nasdaq 100's best half-year performance since the second half of 1999.

A rally in U.S. stocks stalled this week as investors digested Federal Reserve Chairman Jerome Powell's outlook on monetary policy. Powell has stressed twice this week that further rate hikes may be needed this year. At this point, many Wall Street bigwigs can't help but suspect that the best days of Chinese technology stocks may be over. **

Hartnett said that although crowded positions and high investor sentiment will not prevent the stock market from rising again, it is more likely that the stock market will fall this summer than rise. His team expects the S&P 500 to rise 100-150 points at best and drop 300 points at worst before Labor Day in September (September 4). **

To be sure, investors are getting stuck in growth stocks such as technology, as banks and commercial real estate remain "potential for a severe recession, especially if the Fed raises rates again," he added.

A number of institutions predict that the bull market in technology stocks is coming to an end

Coincidentally. Chris Harvey, head of equity strategy at Wells Fargo, also said this week that the current market trend is similar to the tech boom of 1999 and 2000, which didn't end until the Federal Reserve tightened monetary policy.

JPMorgan strategist Marko Kolanovic said U.S. stocks will experience turmoil in the second half of the year due to the lagged impact of the Federal Reserve's aggressive monetary tightening policy on the economy.

In addition, Art Cashin, head of floor trading at UBS, has previously stated that the artificial intelligence boom currently engulfing the stock market will become a "miniature version" of the Internet bubble at the beginning of this century. Well-known economist David Rosenberg (David Rosenberg) said that the artificial intelligence bubble is huge and will soon burst in an alarming manner.

Hartnett is not the first to warn of an "AI bubble." He warned in a previous report, "We don't believe that the stock market is at the beginning of a new bull market, but it feels more like 2000 and 2008, a big rebound before a big crash."