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Home Business & Finance

Tech FOMO: The Fear of Missing Out on the Next Big Thing

Nnaemeka OkwarabyNnaemeka Okwara
May 25, 2024
in Business & Finance
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Tech FOMO: The Fear of Missing Out on the Next Big Thing
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Are you feeling the pressure to jump on the tech bandwagon? You are not alone. Investors are piling into tech stocks like never before, driven by the fear of missing out (FOMO) on the next big innovation. And who can blame them? The last two years have seen “magnificent” gains from the seven megacap stocks leading the market, making tech the sector to be in.

But let’s take a step back and look at the bigger picture. Bank of America’s head US equity strategist, Savita Subramanian, recently pointed out that the stocks with the biggest increases in ownership from long-only active mutual funds over the last year were dominated by tech. Nine out of the top 10 spots were taken by tech stocks, with Eli Lilly (LLY) being the outlier. And even Eli Lilly’s success can be attributed to its weight-loss drugs, which are closely related to the tech-centric innovation we’re seeing in AI.

It is clear that investors are betting big on tech, with over 68% of funds now holding Nvidia (NVDA), the most popular stock on the list. And the biggest increase in fund ownership was seen in Broadcom (AVGO), which jumped from 26% to 45% in just a year. Subramanian notes that the number of “AI” mentions on earnings calls was positively correlated with the change in percent of funds owning each stock. In other words, AI is the name of the game right now.

But be aware: this tech-centric approach is not without its risks. The market is feeling narrow, with Big Tech getting all the attention and positive earnings estimate revisions, while the other 493 non-megacaps are getting cuts. And let’s not forget that we’ve seen this movie before. We’ve had multiple tech bubbles in the last decade, and we know how they end.

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    • So, what is an investor to do?
  • ESSENTIAL
So, what is an investor to do?

Subramanian suggests that “old economy” stocks are already benefiting from AI, and that companies on the demand side are using AI to boost productivity. This means that there are opportunities beyond the shiny new tech stocks that everyone’s talking about.

Tech FOMO is real, and investors are acting accordingly. But let’s not forget to take a step back and look at the bigger picture. There are risks and opportunities beyond the tech sector, and we should be careful not to miss out on them.

ESSENTIAL

  • – Tech FOMO is driving investors to pile into tech stocks.
  • – The last two years have seen “magnificent” gains from the seven megacap stocks leading the market.
  • – Tech stocks dominated the list of stocks with the biggest increases in ownership from long-only active mutual funds over the last year.
  • – AI is the name of the game right now, with companies like Nvidia and Broadcom seeing big increases in fund ownership.
  • – The market is feeling narrow, with Big Tech getting all the attention and positive earnings estimate revisions.
Tags: federal characterFinanceFOMONvidiaTechTech FOMO: The Fear of Missing Out on the Next Big Thing
Nnaemeka Okwara

Nnaemeka Okwara

Okwara Nnaemeka Emmanuel is a skilled wordsmith, passionate blogger, and content writer with a degree in Media Content, He has made a significant mark in the industry. He also holds certification in Marketing and advertising. He has honed a unique blend of creativity and strategic thinking.Driven by a belief in the power of creativity, He has established a niche for himself in diverse regions, leaving a trail of successful projects and satisfied clients. His ability to craft compelling narratives and engage audiences sets him apart in the competitive world of content creation.As a dedicated professional, He continues to push boundaries and set new landmarks in their field. Whether it's through captivating blog posts, persuasive copywriting, or innovative content strategies, Nnaemeka’s consistently delivers excellence, leaving a long lasting impact

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