Source: Cailian Press Author: Huang Junzhi
According to Goldman Sachs' bulk brokerage department data: Fund managers have been selling American technology stocks for three consecutive weeks; Hedge funds have started selling semiconductor stocks that benefit from artificial intelligence prosperity and instead are buying software stocks. This is in stark contrast to the previous week's trading strategy.
The current AI craze has led to a surge in technology stocks, but at the same time, the market is becoming more and more concerned about the underperformance of some individual stocks in the current trend. However, Goldman Sachs' data shows that at the end of May, semiconductor stocks were still the darling of hedge funds, while software stocks were facing the fate of being sold.
However, just one week later, hedge funds' attitudes seem to have made a 180-degree turn: they began selling semiconductor stocks that benefit from AI boom and instead buying software stocks.
According to Goldman Sachs' bulk brokerage department data, fund managers have been net selling US technology stocks for three consecutive weeks. Among them, semiconductor and semiconductor equipment stocks nominally sold the most in the week ending June 7, while software stocks were net bought the most. This is in stark contrast to the previous week's trading strategy.
The S&P Software and Services index has recorded its best weekly performance since January. The index has risen by less than 6% in 2024, lagging behind the semiconductor sector and the large cap. The S&P 500 Semiconductors and Semiconductor Equipment index continues to set new historical highs, rising by about 67% since the beginning of this year.
Richard Ross, Senior Managing Director and Head of Technical Analysis at Evercore ISI, said:"At present, the popularity and position of the software market cannot be worse. I think any funds flowing into the industry are a positive opportunity to buy software stocks, and we support this, but it does not mean that it is an opportunity to reduce semiconductor stocks."
The future is yet to be seen.
As for whether last week's position adjustment is a tactical transaction or a change, it remains to be seen.
At this time of disagreement, software stocks generally show signs of slowing growth brought about by artificial intelligence. Investors have turned to semiconductor stocks, driven by confidence in Nvidia and other chip stocks, and semiconductor stocks have soared due to strong demand.
Goldman Sachs analyst Vincent Lin believes" the industry's stance may change at the industry level." The bank said the healthy rebound of the software business is driven by the profit improvement of computer security technology company CrowdStrike Holdings Inc. and American software company Guidewire Software Inc., as well as dynamic oversold positions.
In Ross' and others' view, there is still room for further growth in semiconductor stocks. Ross believes that semiconductor stocks will explode again after three months of consolidation, and whether tactically or structurally, they are in the best position for further growth.
"From both the short-term and long-term perspectives, semiconductor stocks still have a strong upward momentum compared to software stocks, so there is currently not enough evidence that the technology sector's leadership position is changing," said Will Tamplin, a senior analyst at Fairlead Strategies.
Editor/Lambor