Retail funds continue to flow into software stocks at a record pace

After last week's massive sell-off, retail investors have flocked to buy software and technology stocks, largely ignoring concerns that advances in artificial intelligence models could disrupt certain industries.

According to Vanda Research data, as of Monday's close, the iShares Expanded Tech-Software Sector ETF saw a record net inflow of $176 million over a rolling one-month period. The analytics firm noted that this inflow is more than double the peak at the end of 2024.

Last week, AI company Anthropic launched plugins for its Claude Cowork intelligent assistant, reigniting market concerns that rapidly developing AI systems could erode the core business of traditional software companies, causing shockwaves across global markets.

The S&P 500 Software & Services Index has fallen about 13% since the end of January, with nearly $1 trillion in market value wiped out in the week ending last Thursday.

The iShares Tech-Software ETF has lost nearly 20% of its market value so far this year.

Retail investors have taken the opportunity to buy large technology stocks on the dip. Vanda Research data shows that last Friday, Amazon saw its largest single-day net retail buy since August 2024, surpassing AI chip giant Nvidia.

However, anxiety over AI has spilled over into new areas of the market this week, dragging down U.S. and European insurance stocks. Analysts have linked the decline to progress in ChatGPT's insurance-related applications.

Editor: Guo Mingyu