BlackRock Increases AI Stock Investment, Cuts U.S. Stock Holdings

**BlackRock Bolsters AI Investments and Optimizes U.S. Portfolio Risk** Global asset management leader BlackRock is amplifying its investments in AI stocks while realigning the risk profile of its U.S. model portfolios. This dual strategy reflects a response to growing tariff uncertainties, as reported by Cryptopolitan on October 21. Bloomberg highlighted that on October 10, BlackRock infused $436 million into its iShares AI Innovation and Tech Active ETF (BAI). This substantial inflow is the largest since the ETF's launch in October 2022. With this move, the fund’s size quadrupled, showcasing BlackRock’s robust commitment to AI-driven growth. The BAI fund emphasizes leading AI companies, such as Nvidia (NVDA), Broadcom (AVGO), and Meta (META). Over the past month, the fund surged 29% following a rebound in risk assets. **BlackRock Adjusts U.S. Stock Exposure, Enhances Global Value Stocks and Bonds** Michael Gates, responsible for BlackRock’s Target Allocation ETF model portfolios, stated, “Within technology sectors, AI is where we have the highest investment conviction.” He continued, “Technology remains our top long-term overweight sector, with AI as the key growth driver.” While focusing on AI, BlackRock is reducing its overall U.S. equity exposure. The bond overweight allocation relative to equities decreased from 3% to 1%. Additionally, BlackRock is shifting from U.S. growth stocks to international value stocks. Gates emphasized that these adjustments stem from global trade uncertainties rather than a lack of confidence in the U.S. economy. On tariffs, Gates noted, “We are increasingly cautious of tariffs’ modest negative impacts on global growth, as they could disrupt supply chains and affect corporate confidence.” **Market Reactions and BlackRock’s Additional Moves** On the day of its significant AI investment, investors withdrew $6.28 billion from the iShares Core S&P 500 ETF, the largest outflow since March. The iShares S&P 500 Growth ETF also saw $822 million in withdrawals. Conversely, the iShares MSCI EAFE Value ETF received $912 million, marking its largest inflow since September 2022. BlackRock also allocated over $3 billion to the iShares US Thematic Rotation Active ETF (THRO), achieving the ETF’s largest single-day inflow. Additionally, investments in short-term bonds increased, with the iShares 0-5 Year TIPS Bond ETF (STIP) receiving $553 million, the highest addition since 2022. These investments are part of BlackRock’s model portfolios, designed for financial advisors and institutional clients. These portfolios bundle ETFs into single products to streamline investment strategies. According to Broadridge Financial Solutions, the model portfolio market is rapidly growing, with assets under management expected to reach $11 trillion by 2028.