Goldman Sachs Market Insights: Semiconductor Rebound Rally Likely to Continue, Funds are Reallocating to Storage and Equipment

BlockBeats News, July 23rd - In the market commentary released on July 23rd, Goldman Sachs Trading Desk stated that the current semiconductor rally is expected to continue. The report mentioned that since mid-June, hedge funds have unwound approximately 80% of their year-to-date net buying in global semiconductor and semiconductor equipment stocks, clearing out previous crowded positions. However, over the past day or two, funds have started buying again, with Goldman Sachs believing that this demand may persist. The most concentrated buying is focused on the two sectors that experienced the most significant pullback: storage and semiconductor equipment.

Goldman Sachs Trading Desk observed that the most notable recent buys were in storage stocks such as STX, WDC, MU, SNDK, and equipment stocks like AMAT, ASML, LRCX. This aligns with recent market trends: after continuous pressure on AI and chip stocks, storage stocks such as Micron, SanDisk, Seagate saw significant rebounds, and the PHLX Semiconductor Index recorded a strong recovery.

In terms of positioning, the semiconductor sector remains at high levels, but the extreme overcrowding has eased. The report indicates that the net exposure to global semiconductor and semiconductor equipment stocks as a percentage of the global Prime Book, which was around 10% at the beginning of the year, rose to approximately 24% in June - a historical high. It has now fallen to around 19%, still at the 84th percentile for the one-year period and 97th percentile for the five-year period. The net exposure to U.S. semiconductor and equipment stocks was about 7% at the beginning of the year, increased to around 14% in June, and is currently around 11%, corresponding to the 79th percentile for the one-year period and 96th percentile for the five-year period.

Goldman Sachs believes that the signals from this data indicate that semiconductor positions have not yet reached cheap levels, but rapid deleveraging has mostly been completed. As long as subsequent earnings reports and AI capital expenditure guidance do not deteriorate further, some funds will tend to first replenish the sectors that have been hit the hardest but still have fundamental support.

Whether the future semiconductor rally can continue depends on a few factors: first, observing whether cloud companies like Alphabet, Meta, Microsoft, Amazon will continue to increase AI capital expenditures; second, whether storage prices and orders can support the earnings expectations of stocks like Micron, SanDisk; third, whether equipment orders can validate that AI data center expansion is still ongoing.