Big investors are using the global market collapse as an opportunity to buy up technology and other stocks, betting that forced selling by some traders and panic about global economic growth will bring them rare bargains.

Investment managers at BlackRock, UBS and Vontobel are among those hunting for cheap stocks after Monday’s sell-off. Japan’s Topix saw its worst sell-off since “Black Monday” in October 1987 and the Wall Street S&P 500 index recorded its biggest drop since September 2022.

Much of the opportunistic buying was focused on megacap technology stocks, as sharp declines after Monday’s open offered investors an opportunity to invest in stocks that had been rising for most of the year.

Chip manufacturer Nvidia, for example, temporarily lost up to 15 percent of its value and was just above 90 dollars, returning to the level of the first half of May. Apple, on the other hand, lost up to 11 percent.

On Thursday, the technology-heavy Nasdaq Composite recovered 2.87 percent.

Stephen Yiu, a fund manager at Blue Whale Capital, which is backed by billionaire investor Peter Hargreaves, said he made “opportunistic” purchases of Nvidia shares at $95 when the stock market opened on Monday.

“There is a narrative in the market that we disagree with, which is that there are signs of a slowdown in AI applications,” he said, pointing to comments from hedge fund Elliott Management, which had told investors that Nvidia was in a “bubble” and AI was “overvalued.”

“We think it’s too early to say,” Yiu said. “There are enough developments to show that generative AI will indeed be groundbreaking.”

Clare Pleydell-Bouverie, fund manager at Liontrust, increased her positions in Facebook owner Meta and Amphenol, a US manufacturer of electronic and fiber optic connectors, in the wake of the sell-off.

“After revaluation following a brutal sell-off, we believe some babies were thrown out with the bathwater,” she said, adding: “Meta is among a minority of companies that are reaping the benefits of using AI at scale today.”

Hedge funds bought US technology stocks on Monday. According to brokerage firm Goldman Sachs, this was the largest one-day purchase in around five months. Semiconductor and software companies were among the most sought-after stocks.

Ben Powell, chief investment strategist for Asia Pacific and the Middle East at the BlackRock Investment Institute, said he is “looking for opportunities in the technology sector,” with the so-called “Magnificent Seven” mega-cap technology stocks among his preferred options.

UBS Global Wealth Management said on Thursday that technology stocks’ fundamentals remain “solid” and the sell-off provides an opportunity to increase exposure.

Analysts say the sell-off was exacerbated by forced sales by quantitative funds that maintain strict risk limits.

Deutsche Bank analysts pointed out that trend-following portfolios, so-called “volatility control funds” and other computer-controlled strategies all reduced their stock, bond and commodity exports when the sell-off began last Friday.

The trigger was increasing volatility in the stock markets, which reached their highest level in over a year last Friday and then climbed to their highest level since the early stages of the coronavirus pandemic on Monday.

Volatility control funds, which buy in calm markets and sell in turbulent times to minimize losses, had reduced their equity allocation to the lowest level since November by Monday, according to data from Deutsche Bank.

Citi, Invesco and UBS have all spoken in recent days about the “opportunities” presented by forced selling in equities. Morgan Stanley said on Thursday that investors should take the opportunity to buy “standout AI winners” in Europe, including chipmakers BE Semiconductor Industries and ASML.

Dan Scott, head of Vontobel’s multi-asset boutique, has also spent a lot of time this week adding to his positions in US and European large caps, arguing that the macroeconomic outlook has not really changed despite weaker-than-expected US jobs data for July.

“As the sell-off continued into this week, I asked our investment committee whether we should … do something about it,” he said.

“We see a great opportunity to buy even more stocks that we already have in the portfolio, especially in the US, because of the quality and transparency of the earnings. We are not overly risk-averse, but have bought stocks that are already on our list.”

Other investors were drawn to Asia.

“If you look at the sell-off we’ve seen in Taiwan and Korea, smaller markets but pretty central to the tech ecosystem … Their sell-off (on Monday) was pretty dramatic as well,” said BlackRock’s Powell. “And that’s on our watch list as well.”

The 12.2 percent drop in the Japanese Topix on Monday – which was followed by a significant recovery on Tuesday – also offered some buying opportunities.

“We made our purchases on Monday and spent the cash we had,” said Peter Tasker, co-founder of Arcus Investment in Tokyo, adding that the Japanese stock market suddenly looked “extremely cheap.”

Additional reporting by Ortenca Aliaj