Hedge Funds Sell Chip Stocks for Fourth Week, But Not AI Trade
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July 6, 2026 – 12:55 pm
Hedge funds have cut their holdings of semiconductor stocks for a fourth straight week, according to Goldman Sachs prime brokerage data. This has made chipmakers and their equipment suppliers the most heavily net-sold corner of the US market.
The move comes as parts of the AI trade show signs of weakness, leading some to interpret it as the first crack in a rally that has pushed names like SK Hynix towards a trillion-dollar valuation. However, closer inspection reveals:
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A retreat rather than a rout: The selling involves managers trimming existing long positions rather than opening fresh bearish bets, suggesting risk management rather than conviction.
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Crowded trade persists: Despite four weeks of selling, hedge funds’ net exposure to semiconductors remains near the top of historical ranges, indicating the trade remains very crowded.
Goldman Sachs analysts attribute the selling not to a shift in fundamental views but to managers adding downside protection in higher inflation and climbing bond yield environments. The most obvious place to trim positions is the sector that has run the hardest.
The price action reflected this cautious mood: During a two-day drop of 6.3% and 5.4%, the main index of semiconductor stocks still managed to post positive returns for the week as money rotated toward other AI beneficiaries, not an exit from the theme entirely.
This rotation towards the next tier of companies expected to benefit from AI spending—from power and cooling suppliers to software—is a development worth watching.