Global stock prices are falling amid growing concerns about an AI bubble. And for the first time in 20 years, fund managers are expressing concerns about companies’ “overinvestment.” That’s according to the latest edition of Bank of America’s Global Fund Manager Survey. The poll surveyed 172 fund managers with assets worth $475 billion and was conducted from Nov. 7 to Nov. 13, just before stocks around the world began selling off. “Hyperscalers, slow down!” BofA strategists said in a note accompanying Tuesday’s survey results that investors remained bullish on stocks in the second week of November, but fears of a bubble were growing. In their analysis of the survey results, they said, “For the first time in 20 years, investors say companies are ‘overinvesting’ (read ‘slow down, hyperscalers’).” The survey results indicate that this is the first time since August 2005 that a majority (net 20%) of fund manager survey participants said their companies are spending too much on capital. “This surge is being driven by concerns about the size and financing of the AI capital investment boom,” BofA strategists said. But they noted that new concerns related to overspending by AI hyperscalers “have not translated into broader balance sheet concerns in the corporate sector.” When asked what companies should do about cash flow, one in three fund managers said companies should strengthen their balance sheets, 31% said companies should return cash to shareholders and 29% said companies should increase capital spending. AI bubble? The potential fallout from the bursting of the AI bubble has been a hot topic in financial markets in recent weeks. Global stock markets resumed selling on Tuesday, fueled by concerns about the valuations of AI stocks. Big tech stocks at the center of the AI boom, including Nvidia, Palantir, and Microsoft, were among the biggest losers on Tuesday. A BofA survey found that 45% of global fund managers cited AI bubbles as their top risk, up from one in three respondents last month. Of those surveyed, 53% said AI stocks were already in a bubble, down from a record high of 54% in October. Meanwhile, BofA said a record 63% of survey participants now believe global stock markets are overvalued. Still, most people who spoke to the bank seem to think the stock has at least some upside. A majority of fund managers told BofA that they expect the S&P 500 index to end 2026 in the 7,000 to 7,500 range. This represents a 6-14% premium to Tuesday’s closing price. Many respondents said looking beyond the U.S. could be even more beneficial, with 42% of those surveyed saying they think international stocks will be the best-performing asset over the next 12 months, compared to about one in five saying the same for U.S. stocks. As the AI scare sets in, BofA found that allocations to healthcare, consumer staples and banking stocks have increased month-over-month, while allocations to consumer discretionary, telecom, industrial and tech stocks have shrunk. Technology allocations hit a six-month low in November, while allocations to global banks hit their highest level in almost a year, according to the survey.
