In what scenario do investors typically move money from large tech companies to smaller companies?

The correct answer highlights a common strategy among investors who are always looking for greater returns. When investors identify better growth potential in smaller companies compared to the established large tech firms, they may decide to reallocate their funds. This shift often occurs when smaller companies are perceived as undervalued, or when they present innovative solutions that can yield higher growth rates.

Additionally, investors might find that these smaller firms offer lower stock prices, making them more attractive for investment. The combination of perceived growth potential and favorable pricing can lead to a migration of capital from large, stable companies to smaller, more dynamic ones. In an environment characterized by a search for alpha, this behavior is a typical manifestation of investor sentiment and market dynamics, as individuals aim to maximize their investment returns based on anticipated future performance.

While other scenarios such as economic conditions or regulatory changes can influence investment decisions, the motivation of finding better growth potential and lower prices specifically captures the competitive drive of capital flows in equity markets.