Tech stocks saw the biggest inflow since 2008 among Bank of America clients, according to a Tuesday note.
Clients of the bank poured more than $3 billion into the tech sector last week, BofA said.
But tech stocks may not provide the defense investors are used to as earnings revisions are set to pick up, according to the bank.
Maybe that's why clients of Bank of America poured money into the tech sector at the fastest pace since 2008 last week. That according to a Tuesday note from Bank of America's Jill Hall, who noted that the bank has only been keeping track of the data since 2008.
According to the bank, clients purchased more than $3 billion of tech stocks last week, helping drive overall US stock inflows among its clients to a net $1.8 billion.
"Buying was led by institutional clients, while private clients were net buyers for the sixth consecutive week," Hall said. Most of the inflows were skewed towards individual stocks over ETFs, the note said.
But there's a big risk for tech investors as earnings revisions are set to drag the sector lower, Hall said. That means the tech sector may not provide the type of defense investors have grown accustomed to over the past decade going forward.
"While most Tech companies have beaten expectations this quarter, we see risk that tech may not prove to be as defensive as some investors expect; Nasdaq earnings revisions have continued to lag S&P 500 earnings revisions," Hall said.
Weakness in the tech sector was heightened this week after Nvidia issued a profit warning and said its revenue in the quarter would track more than $1 billion below its prior guidance due to ongoing weakness in the gaming sector. Shares of Nvidia have plunged by more than 10% since Monday's profit warning.
The selling picked up on Tuesday after Micron followed Nvidia's footprints and issued lower guidance due to falling demand as sales slow down for computers and video game consoles. Micron stock fell more than 5% on Tuesday, and helped drag the Nasdaq 100 lower by more than 1%.
As tech earnings roll-in, investors that piled into the sector in recent weeks will be hoping that results hold up better than the early warnings from Nvidia and Micron. But the writing on the wall isn't great when two bellwethers are already lowering expectations.
Read the original article on Business Insider