Bank of America data showed that active long-only funds sharply cut global semiconductor holdings last month, with sales totaling about $44.4 billion. The move suggests institutional capital has been pulling back from what BofA described as one of the most crowded AI trades.
According to the data, money has rotated into telecom, energy, materials, and grid modernization. BofA said that shift points to a more visible internal redistribution within the broader AI theme rather than a full exit from the sector. The bank also said the figures help explain part of the recent pressure seen in market trading.
Ahead of Nvidia earnings, expectations for AI demand remain high, but chip stocks had already posted large gains and positions had become more concentrated. BofA said semiconductors could be the first area to face selling pressure if long-term yields rise, if AI revenue expectations cool, or if investors begin to question returns on cloud providers’ capital spending. It added that over the past year, funds sold most heavily in AI computing and quantum computing, while medium-term allocations may shift toward power, equipment, networking, and storage tied to AI infrastructure spending.
ChainCatcher reported on Aug. 25 that Bank of America data showed active long-only funds sharply reduced global semiconductor holdings last month, selling about $44.4 billion in stocks. The data suggests institutional money is pulling back from one of the most crowded AI trades.
Capital instead moved toward telecom, energy, materials, and grid modernization, showing a clearer redistribution within the AI theme itself. BofA said the figures help explain part of the recent pressure seen in the market.
Before Nvidia reports earnings, investor expectations for AI demand remain high. Even so, chip shares had already risen significantly and positioning had become more concentrated. BofA said the semiconductor sector would likely be among the first to face position cuts if long-term yields move higher, if expectations for AI revenue weaken, or if returns on cloud providers’ capital expenditure come under question.
BofA also said the themes that saw the most fund selling over the past year included AI computing and quantum computing. In its view, that indicates capital has not fully left AI, but is reducing exposure to the most crowded trades.
The bank expects chip stocks to remain sensitive in the short term to Nvidia’s results, guidance from cloud providers, and the direction of interest rates. Over the medium term, it said capital may prefer areas such as power, equipment, networking, and storage that can benefit from AI infrastructure spending.
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