BlockBeats reported on July 23 that Goldman Sachs’ trading desk said in a market note published the same day that the current rebound in semiconductor stocks may continue.
The report said hedge funds have unwound about 80% of their year-to-date cumulative net buying in global semiconductor and semiconductor equipment stocks since mid-June, clearing out much of the earlier crowding in the trade. In the last one to two days, buyers have started to come back, and Goldman said that demand could continue.
Buying has centered on memory and equipment names
Goldman’s trading desk said the strongest buying interest has been concentrated in the two segments that saw the deepest pullback earlier: memory and semiconductor equipment.
It identified notable recent buying in memory stocks STX, WDC, MU, and SNDK, along with equipment names AMAT, ASML, and LRCX.
That pattern has matched recent market moves. After sustained pressure on AI and chip stocks, memory names including Micron, SanDisk, and Seagate saw a sharp rebound at one stage, while the PHLX Semiconductor Index also posted a strong recovery.
Positioning has eased, but it is still elevated
On positioning, Goldman said semiconductor exposure remains high even though the most extreme crowding has eased.
The report showed that net exposure to global semiconductor and semiconductor equipment stocks as a share of the global Prime Book was about 10% at the start of the year, rose to about 24% in June, a record high, and has now fallen back to about 19%. Even after that decline, the level still stands at the 84th percentile on a one-year basis and the 97th percentile on a five-year basis.
For U.S. semiconductor and equipment stocks, net exposure was about 7% at the start of the year, climbed to about 14% in June, and is now around 11%, corresponding to the 79th percentile over one year and the 96th percentile over five years.
Goldman said the signal from those numbers is that semiconductor positioning has not yet fallen into cheap territory, but the rapid deleveraging phase is already largely complete.
Three factors to watch next
The bank said that if upcoming earnings reports and AI capital spending guidance do not deteriorate further, some investors may keep buying back the parts of the sector that were hit hardest but still retain fundamental support.
Goldman said the durability of the rebound will depend on three points:
- whether AI capital expenditure plans from cloud companies including Alphabet, Meta, Microsoft, and Amazon continue to move higher;
- whether memory prices and orders can support earnings expectations for companies such as Micron and SanDisk;
- whether orders for equipment stocks can confirm that AI data center expansion is still continuing.