Technology sector optimism has catapulted the SPDR S&P 500 ETF Trust (NYSE:SPY) to all-time highs in 2024 even amid tough macroeconomic conditions and geopolitical uncertainty. Despite the rally, there are mixed signals on Wall Street.

The Data: A post on X relayed data from Goldman Sachs.

Hedge funds previously had large sell-offs during the latter half of 2023 before rejoining the tech trade throughout the winter and spring of 2024.

Why it Matters: The S&P 500’s rally in 2024 can largely be attributed to the meteoric rise of semiconductor, AI and AI-adjacent companies. Tech stocks are currently trading at all-time high valuations relative to earnings, which could indicate a potential top for the AI play. Companies must bring in historic earnings to justify their valuations.

Meanwhile, many signs point to AI being a legitimate value-add for businesses and consumers. Many analysts, including those from Goldman Sachs, have cast doubt on whether AI’s value justifies its astounding investment costs.

Although many experts point to the AI play’s rally as quixotic, investors clearly beg to differ — the iShares Semiconductor ETF (NASDAQ:SOXX) is up more than 36% in 2024, approaching all-time highs after a drawdown in late June.

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