🚀 The Big Rotation
While the Nasdaq has seen recent volatility (down ~1.9% last week), the headline isn't just "selling"—it's a reallocation.
Sector Divergence: Investors are pulling back from Software & Services (which saw a sharp 7.5% repricing) due to concerns about AI disruption.
Infrastructure Inflow: Capital is flowing heavily into semiconductors and AI hardware. Companies like Nvidia and Broadcom saw "dip-buying" surges of up to 7% as investors realize they are the primary beneficiaries of the projected $600 billion in AI capex for 2026.
📊 Key Flow Metrics (Feb 2026)
Institutional vs. Retail: For the week of February 2, institutional investors were net sellers (-$121M), while retail investors remained bullish net buyers (+$103M), particularly in tech and REITs.
ETF Activity: Information Technology ETFs still gathered roughly $828 million in new capital last week, showing that despite the "AI bubble" talk, the sector remains a primary anchor for many portfolios.
The "Barbell" Strategy: Fund managers are increasingly moving toward a barbell portfolio—retaining upside in tech/AI while balancing it with high-quality value stocks to hedge against the volatility seen early this month.
💡 What’s Driving the Flow?
Capex Reality: Amazon, Microsoft, and Alphabet have projected nearly $600 billion in AI spending for 2026. This is a massive "forced" flow into the hardware sector.
Valuation Discounts: Despite the rally, the technology sector is currently trading at an estimated 16% discount to fair value (up from an 11% discount last month), attracting value-seekers back into the fray.
Global Liquidity: As the Yen stabilizes and the BoJ shifts policy, some global "carry trade" capital is rotating back into U.S. tech as a safe-haven for growth.
