US equity funds see inflows as AI optimism revives demand for tech stocks

US equity funds attracted strong investor inflows in the week ended July 29, snapping a two-week streak of withdrawals as renewed confidence in artificial intelligence (AI) and robust earnings from major technology companies lifted sentiment, according to Reuters, citing LSEG Lipper data.

Investors poured a net $11.83 billion into U.S. equity funds during the week, reversing the combined $10.68 billion in outflows recorded over the previous two weeks.

The turnaround came after upbeat quarterly results from Microsoft and Amazon helped ease concerns over heavy AI-related capital expenditure. Earlier in the earnings season, results from Alphabet and Tesla had raised worries over cash flow pressures and weighed on the technology sector.


According to Reuters, Microsoft projected stronger cloud revenue growth in the current quarter, while Alphabet reported a rise in advanced cloud orders that are yet to be recognized as revenue, reinforcing investor confidence in the long-term AI growth story.

Largecap funds emerged as the biggest beneficiaries, drawing $11.57 billion in net inflows, the highest weekly purchase since June 24. In contrast, investors pulled $2.29 billion from mid-cap funds and $196 million from smallcap funds.

Sector-wise, technology funds led the gains with $4.9 billion in inflows, their strongest weekly intake since July 8. Financial sector funds attracted $1.96 billion, while consumer staples funds received $751 million, as per the Reuters report.

Meanwhile, demand for U.S. bond funds moderated, with net inflows slowing to a 15-week low of $1.34 billion during the week.

Inflows into short-to-intermediate government and Treasury funds eased to $865 million from $1.32 billion a week earlier. Similarly, short-to-intermediate investment-grade bond funds attracted $1.08 billion, down from $1.54 billion in the previous week.

General domestic taxable fixed-income funds recorded net outflows of $466 million, while municipal debt funds received $761 million in fresh investments.

Money market funds continued to witness investor withdrawals, registering $11 billion in net outflows for the third consecutive week, according to Reuters citing LSEG Lipper data.