Barclays says FOMO may have more legs as tech trade is not crowded yet

Barclays strategists weighed in on the ongoing rally in tech stocks, fueled by an AI frenzy.

Nvidia’s (NASDAQ:) massive forecast upside fueled the latest wave of buying, sending tech-heavy to fresh 13-month highs.

Despite strong buying interest, strategists argue that Tech is generally not crowded as inflows went mainly to Growth and Quality stocks.

Hence, Barclays remains bullish on the sector as FOMO (fear of missing out) trade “may have [more] legs.”

“Despite a resilient equity market and the frenzy in the Tech space, broad equity exposure is neutral at best. So fairly symmetric from a risk-reward standpoint, rather than a particular threat to the equity market, in our view. Meanwhile, significant dry powder in the form of large cash holdings means investors may continue to buy dips, as they have done so far this year,” they said in a client note.

The strategists also highlight that systematic funds and hedge funds are the main buyers of stocks recently while mutual funds and retail traders remain cautious.