Why fund managers are ‘uber-bullish’ despite AI concerns

Professional investors are aggressively confident on the outlook for equities and gold but worry that artificial intelligence (AI) capital expenditure has gone too far. 

The latest issue of Bank of America’s Global Fund Manager Survey pointed to “uber-bullish” sentiment, with respondents at their most optimistic since June 2021 based on their cash levels, equity allocation and global growth expectations. 

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Cash levels were up to 3.4%, from 3.2% in January, marking the first increase in seven months.  

Meanwhile, a net 52% of respondents expect no “landing” (or retrenchment) for the global economy. Expectations for a “boom” period of above-average economic growth reached their highest level since February 2022.  

On top of that, roughly a quarter of respondents thought global corporate earnings would rise by 10% or more in the next 12 months. 

Gold to $6,000? 

In this context, investors are bullish on both equities and commodities. The latest survey produced a confident take on the gold price, with respondents, on average, expecting the precious metal to hit $6,200, marking a 23% increase from current levels. 

But concerns about AI spending, having surfaced in earlier editions of the survey, have only intensified.  

Around 35% of chief investment officers canvassed by the survey are telling company chief executives to improve their balance sheets, with a record number of respondents saying companies are “overinvesting”. An AI bubble was the most popular option for respondents asked to identify the biggest tail risk for markets. 

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This issue is already affecting the funds available to UK investors. We noted last week that some widely followed global equity fund manager have backed away from the Magnificent Seven cohort on the back of concerns about AI spending. 

A small-cap and value resurgence 

Some of these concerns have played out in respondents’ equity preferences. Respondents expect small-cap shares to outperform large caps for the first time in 10 months, while 43% of respondents expect the value investment style to outperform growth. 

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Value has already made a strong start to the year: of the factor-focused MSCI World exchange-traded funds (ETFs) we recently discussed, the iShares Edge MSCI Wld Val Fctr ETF $Acc GBP (LSE:IWFV) has already returned around 9% so far in 2026. Its “quality” equivalent has made around 3%. 

Investors have begun to question the dominance of certain markets and sectors, from a pivot away from the US to the more recent concerns about whether companies in areas ranging from software to trucking can withstand the onslaught of AI disruption. 

As such, it’s interesting to see respondents to the latest survey rotating into sectors such as energy, materials and consumer staples, and regions including the eurozone and the emerging markets. They have, meanwhile, shifted away from US stocks, tech and the US dollar.