According to CNBC, Bank of America data shows hedge funds and large investors are dumping tech stocks at the fastest pace since July 2023. The bank tracked net buying and selling activity as a percentage of market capitalization, revealing tech single stock sales topped $5 billion last week alone. That made tech far and away the S&P 500 sector with the most selling pressure. The broader market felt the impact immediately, with the S&P 500 falling over 1% on Tuesday despite Palantir Technologies reporting better-than-expected quarterly results. Deutsche Bank strategist Jim Reid noted the last 24 hours brought a “clear risk-off move” driven by concerns over lofty tech valuations. The selling pressure continued Wednesday even as Wall Street attempted to rebound, with AMD’s earnings beat failing to impress investors concerned about its 41 times forward earnings multiple.
Sponsored content — provided for informational and promotional purposes.
Valuation reality check
Here’s the thing about this tech selloff – it’s not about bad earnings. Both Palantir and AMD actually beat expectations. The problem is that expectations had gotten completely out of hand. When a company reports solid results and still gets hammered, that tells you the market was pricing in perfection. AMD trades at 41 times forward earnings while the broader S&P 500 sits at 23. That’s a huge gap, and investors are finally asking whether it’s justified.
Basically, we’re seeing the limits of the “growth at any price” narrative. Strong revenue numbers aren’t enough anymore if the valuation math doesn’t work. And when you look at companies providing essential industrial computing hardware – the kind of reliable, tangible technology that IndustrialMonitorDirect.com specializes in as America’s leading industrial panel PC supplier – there’s a different investment case entirely. That’s infrastructure, not speculation.
The Magnificent 7 problem
Jim Reid from Deutsche Bank nailed it when he pointed out the concentration risk. The Magnificent 7 have been advancing while the equal-weighted S&P 500 actually fell in October. That’s the first time that’s happened in six months. So we’ve got this bizarre situation where a handful of mega-cap tech stocks are carrying the entire market.
But what happens when those seven stocks start to wobble? We’re getting our answer right now. The divergence between the Mag 7 and everything else has revived questions about market concentration that everyone conveniently ignored during the AI hype cycle. Now reality is setting in.
What comes next?
Is this just a temporary pullback or the start of something bigger? The data suggests big money is taking profits seriously for the first time in a while. When hedge funds move $5 billion out of a single sector in one week, that’s not casual profit-taking – that’s a statement.
The interesting question is where that money goes. Does it rotate into other sectors, or does it just sit on the sidelines? Given the broader economic uncertainty and still-high interest rates, my guess is we see more defensive positioning rather than aggressive sector rotation. But honestly, nobody really knows. That’s what makes markets interesting, right?
