A recent Bank of America survey indicates growing apprehension among fund managers regarding corporate overinvestment, particularly in AI. A net 20% of fund managers believe companies are overspending, marking the first time this view has held a majority since 2005. This concern is fuelled by the magnitude and financing of AI capital expenditure.
Approximately 45% of those surveyed identified an AI bubble as the biggest tail risk in the market, a notable increase from the previous month. Around 53% of fund managers think AI stocks are already in a bubble. Despite these anxieties, many investors anticipate a stock market recovery and view AI as genuinely transformative, expecting it to boost productivity.
While overall sentiment remains optimistic, with expectations of a soft economic landing, fund managers are becoming more cautious in their risk assessments within the AI sector. The survey reveals a market at a delicate crossroads, balancing optimism with emerging concerns about an AI-driven investment frenzy.
