US equity funds recorded their first weekly outflows in three weeks in the week ended October 28, as investors grew cautious ahead of earnings from major AI hyperscalers amid concerns about the rising cost of their AI build-outs.

Investors withdrew a net $6.65 billion from US equity funds during the week, marking the first weekly outflow since October 7, according to LSEG Lipper data.

Microsoft (MSFT.O) reported a strong cash-flow beat earlier this week and forecast robust cloud growth, offering fresh evidence that its substantial AI investments were paying off. However, Alphabet (GOOGL.O) and Amazon (AMZN.O) disappointed investors with their results.

US large-cap funds recorded $3.8 billion worth of outflows, partly reversing inflows of $8.72 billion the prior week. Investors also shed mid-cap funds of $2.11 billion, small-cap funds of $832 million and multi-cap funds of $303 million.

Sectoral funds recorded net weekly inflows of $3.52 billion — the largest in three weeks — driven largely by $4.54 billion in net purchases of technology funds. Financial and healthcare sector funds saw outflows of $713 million and $701 million, respectively.

US bond funds attracted $2.04 billion, as demand recovered after a net $969 million worth of sales in the prior week.

Municipal debt funds, general domestic taxable fixed-income funds and inflation-protected funds recorded net purchases of $1.74 billion, $1.31 billion and $1.08 billion, respectively.

Meanwhile, short- to intermediate-term government and Treasury funds and short- to intermediate-term investment-grade funds saw outflows of $2.48 billion and $1.59 billion, respectively.

Money market funds recorded net outflows of $47.66 billion, following roughly $14.97 billion in inflows the previous week.