AI Stock Rally Stumbles as US Equity Fund Inflows Hit One-Month Low in November 2025
- Why Are Investors Pulling Back From AI Stocks?
- Where's the Money Going Instead?
- Which Sectors Got Hit Hardest?
- What's Shaking Confidence in AI Stocks?
- Is This the End of the AI Rally?
- What Are the Experts Saying?
- FAQs About the AI Market Pullback
The AI-driven market rally is showing cracks as investor enthusiasm cools - US equity funds just recorded their weakest inflows since mid-October, with tech stocks taking a particular beating. Here's what's shaking Wall Street's confidence in the AI boom.
Why Are Investors Pulling Back From AI Stocks?
The Nasdaq Composite's 4.8% drop from its late-October peak tells the story - after riding the AI wave to record highs, tech investors are suddenly getting cold feet. In the week ending November 12, US equity funds attracted just $1.15 billion, the lowest weekly net inflow since October 15 when we actually saw outflows of $557 million. Large-cap funds didn't escape the trend either, with inflows plunging from $11.91 billion to $2.35 billion week-over-week.
Where's the Money Going Instead?
Bond markets are seeing unexpected love - US investors poured $8.96 billion into bond funds last week, nearly double the $4.63 billion from the previous week. The smart money appears to be chasing:
- Short-to-medium term government/Treasury funds ($3.01 billion)
- Investment-grade corporate debt ($2.06 billion)
- Taxable domestic bond funds ($1.96 billion)
Which Sectors Got Hit Hardest?
Tech took the biggest punches - the entire sector managed only $1.74 billion in inflows, the lowest in nearly a month. Small and mid-cap funds bled $889 million and $1.36 billion respectively. The lone bright spot? Healthcare services snapped a four-week outflow streak with $777 million in fresh investments.
What's Shaking Confidence in AI Stocks?
Several factors converged to rattle investors:
- October's weakening labor market data raised economic concerns
- High-profile AI plays like Palantir dropped 8% despite solid earnings
- Oracle and other tech giants saw significant pullbacks
- Behavioral economist Peter Atwater comparing AI stocks to volatile crypto assets
Is This the End of the AI Rally?
Not necessarily - major corporations continue betting big on AI infrastructure. Google just announced a $6.4 billion investment in German cloud/AI data centers, plus renewable energy deals to power its Ohio facilities. Meanwhile, Palantir's stock had surged 135% earlier this year following explosive AI demand.
What Are the Experts Saying?
The BTCC research team notes: "We're seeing typical profit-taking after an extended rally. While AI fundamentals remain strong, valuations got ahead of themselves. This correction could create buying opportunities for long-term investors."
Market data sourced from TradingView and LSEG.
FAQs About the AI Market Pullback
How much did US equity fund inflows drop?
Weekly inflows plummeted to $1.15 billion for the week ending November 12 - the lowest since October 15 when funds actually saw outflows.
Which tech stocks were most affected?
Palantir fell 8% despite good earnings, while Oracle and other major tech players saw significant declines during this period.
Where are investors moving their money?
Bond funds attracted $8.96 billion last week, with particular interest in short-to-medium term government securities and investment-grade corporate debt.
