MLIV Survey: 53% of Investors Shifting to Old-Economy Stocks in H2
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A Bloomberg MLIV survey shows 53% of respondents plan to rotate into traditional-economy stocks in the second half, taking profits from tech — a signal that confidence in AI's sky-high valuations is cracking and rotation may define H2.
Why are more than half of investors pulling back from tech?
Bloomberg MLIV surveyed 221 investors between June 22 and July 2; 53% said they favor adding traditional-economy stocks in H2.
The logic is straightforward: AI leaders have surged over the past year — the Philadelphia Semiconductor Index nearly quadrupled from its 2025 low, and Nvidia's market cap briefly topped $5 trillion.
This means → a majority of professional investors believe part of that rally is borrowed, and now is the time to cash in.
How serious is the valuation-bubble fear?
The worst-case scenario investors flag: big tech abruptly cuts hundreds of billions of dollars in AI capital spending, leaving richly valued names exposed to a sharp pullback.
In plain terms = AI is burning cash to build compute capacity right now. If companies decide the payoff is not there and slash budgets, stock prices propped up by the "AI story" lose their floor.
The Philadelphia Semiconductor Index nearly doubled from late March to late June, then fell for two straight weeks, pulling back roughly 8% — the signal is already showing up.
Which markets are most likely to reverse?
34% of respondents named South Korea's Kospi as the index most likely to see a trend reversal; 22% pointed to the Philadelphia Semiconductor Index.
Kospi's risk is concentration: Samsung Electronics and SK Hynix together account for over 35% of its weight — both are semiconductor companies.
This means → Kospi is effectively a semiconductor ETF. If the chip sector turns, it could fall faster than the Philadelphia Semiconductor Index itself.
Where is the money rotating to?
Steve Sosnick, chief strategist at Interactive Brokers, says investors are rotating into industrials and other sectors that benefit from a healthy economy.
In plain terms = the logic is "AI stocks have paid off — now move the money to companies tied to the real economy, which keep earning as long as the economy holds up."
Macro strategist Brendan Fagan cautions, however, that several heavyweight names in the Philadelphia Semiconductor Index trade at or below their historical forward P/E — not all of them are overpriced.
What do the bulls say — and what is the key test for H2?
Former Wall Street economist Jim Paulsen notes that most investors still worry more about missing the next leg of the bull market than about a major setback.
This reflects a market caught in a contradiction — one hand reaching for the exit, the other afraid of selling too early.
Fagan offers the decisive test: whether AI capital spending continues to deliver. That will determine if this rotation is a short-term portfolio shuffle or a lasting shift.
Content is for reference only, not financial advice.