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US Equity Fund Inflows Slow as Tech Selloff Pressures Demand

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U.S. equity fund inflows eased in the week through February 4 as investors turned cautious amid a selloff in software stocks, according to LSEG Lipper data. Net purchases totaled $5.58 billion, down nearly 48% from the previous week’s $10.82 billion, even as strong earnings from Eli Lilly and Super Micro Computer helped offset some of the pressure.

Technology shares weakened after Anthropic introduced a legal plug-in for its generative AI chatbot, heightening concerns about disruption across the software sector. As a result, investors pulled $2.34 billion from technology funds. By contrast, industrials attracted $2.11 billion, while metals and mining funds drew $1.44 billion, reflecting a rotation toward more cyclical and defensive exposures.

Fund flows also diverged by market size. U.S. large-cap funds recorded $1.1 billion in inflows, while mid-cap and small-cap funds saw outflows of $1.59 billion and $1.67 billion, respectively. The pattern underscores investor caution toward riskier segments during periods of sector-specific volatility.

Bond funds continued to benefit from risk aversion, logging a fifth straight week of inflows totaling $11.11 billion. Short- to intermediate-term investment-grade funds led with $6.34 billion—the largest weekly intake since at least 2022—while municipal and inflation-protected funds also saw solid demand. Money market funds attracted a hefty $83.09 billion, their biggest weekly inflow since early December, highlighting a broader preference for liquidity amid market uncertainty.

SoftBank Profit More Than Doubles to $16.6 Billion on OpenAI Valuation Gains

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SoftBank Group reported a stunning surge in quarterly profits, more than doubling its net income to 2.5 trillion yen ($16.6 billion) in the July–September period, thanks largely to massive valuation gains from its stake in OpenAI, the creator of ChatGPT.

The figure far exceeded analyst expectations — three LSEG analysts had forecast an average profit of just 207 billion yen — and also dwarfed the 1.18 trillion yen profit recorded during the same period last year.

SoftBank’s Vision Fund unit, which manages the company’s global technology investments, posted a 3.5 trillion yen investment gain, with 2.16 trillion yen attributed directly to its OpenAI holdings.

The result comes amid a surge in AI-related stocks and infrastructure spending, pushing SoftBank’s shares to record highs. The company has emerged as one of the biggest beneficiaries of the AI investment boom, fueled by global demand for computing power and data centers.

In March, SoftBank led a $40 billion funding round valuing OpenAI at $300 billion. By October, it joined a group of investors purchasing $6.6 billion worth of OpenAI shares from employees at a $500 billion valuation, marking one of the largest private valuations in tech history.

Still, some investors are wary of an emerging “AI bubble”, questioning whether such vast capital inflows can sustain their expected returns.

SoftBank is also ramping up other AI and semiconductor bets. It recently sold 32.1 million shares of Nvidia for $5.83 billion, raised more than 620 billion yen in bonds across three currencies, and secured bridge loans totaling over $15 billion to fund its OpenAI and Ampere chip ventures.

Founder and CEO Masayoshi Son, known for high-stakes investments in transformative technologies, remains confident in AI’s potential despite a mixed record that includes triumphs like Alibaba and failures such as WeWork.

Datadog Shares Surge 23% After Revenue Beat and Strong AI Demand

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Datadog shares soared 23% on Thursday, marking the company’s second-best trading day ever, after the cloud software firm posted third-quarter results that exceeded Wall Street expectations and projected robust growth for the final quarter of the year.

The New York-based company reported $885.7 million in Q3 revenue, up 28% year-over-year and well above analyst estimates of $852.8 million, according to LSEG data. For the current quarter, Datadog forecasts between $912 million and $916 million in revenue, surpassing Wall Street’s $887 million projection.

Adjusted earnings reached 55 cents per share, topping FactSet estimates of 45 cents. The company also recorded net income of $33.9 million, or 10 cents per share, compared to $51.7 million, or 14 cents, a year earlier.

CEO Olivier Pomel credited the company’s momentum to continued innovation in artificial intelligence (AI) and cloud security tools. “The Datadog R&D team is innovating rapidly to help our customers solve problems in the AI space,” he said in a statement.

Datadog has rolled out a series of AI-focused products this year, including Bits AI Agents for SRE, which can automatically investigate system alerts and generate response drafts, and expanded features for LLM Observability, designed to monitor large language models. The firm also unveiled its MCP Server, which connects AI agents to enterprise data sources, and TOTO, its proprietary foundation model.

The company said the number of customers generating over $100,000 in annual recurring revenue rose 16% in the quarter, signaling sustained enterprise adoption.