Are investors turning bearish on US stocks? BofA flags outflows By Investing.com

The flow picture is less about “sell America” in the abstract and more about a narrow de-risking of the most crowded U.S. factor exposures into a regime that rewards earnings visibility and balance-sheet durability. That means the first-order beneficiaries are not just overseas indices, but U.S. multinationals with non-U.S. revenue exposure and lower duration risk: healthcare, energy, and select industrials can keep attracting capital even if domestic active managers remain underweight the U.S. The biggest losers are the long-duration, narrative-heavy parts of tech where ownership is already rich and incremental buyers are thinning; when passive keeps supporting the tape but active is net selling, price action can stay fragile until a catalyst forces re-acceleration in revisions.

The second-order effect is that this is likely to broaden leadership inside equities rather than trigger a clean regional unwind. If global allocators are rotating into Europe, Japan, and EM, U.S.-listed firms with supply-chain leverage to those markets — notably semis and industrial automation — can still work, but only where earnings revisions offset crowding risk. That makes AVGO, TSM, and ASML more resilient than the megacap index weightings implied by the broader U.S. selloff, while MSFT, NVDA, and META remain vulnerable to multiple compression if AI spend fails to translate into near-term monetization.

The market may be underappreciating how long this can persist: active reallocations tend to last months, not days, because they reflect process changes in PM positioning rather than one-off macro shocks. A reversal likely needs either a sharp U.S. growth reacceleration, a decline in USD strength that removes the foreign-asset tailwind, or a broad tech earnings beat that forces underowned U.S. exposure back on. Until then, the more actionable trade is to own the strongest balance-sheet/value and cash-flow names while fading the most crowded software/AI exposures on rallies.