Shares of Salesforce (NYSE:CRM) and Dell (NYSE:DELL) saw historic earnings-related moves last week, marking the latest examples of US technology stocks witnessing huge jumps or price fragility.
“In fact, such fragility shocks for Tech/US megacaps are near 30-year+ extremes today, both in terms of frequency and magnitude,” Bank of America analysts noted.
“In our view, this borderline erratic price action not only reflects the uncertainty in estimating the value of technological disruption posed by AI but also highlights a secular shift in markets towards greater fragility,” they added.
So far, these shocks have been idiosyncratic, BofA highlighted, occurring on different days. However, there is a risk of a correlated shock among these influential companies, which dominate US and global equity indices.
Analysts believe that index volatility currently underprices this risk, offering value as a hedge against fragility or broader market disruptions.