Hedge Funds Cut AI and Semiconductor Positions by 5%, Approaching Bottom by Late July

According to Bloomberg, on July 20, hedge funds significantly reduced positions in artificial intelligence and semiconductor stocks by approximately 5% of total market value, marking a historically large drawdown. UBS's prime brokerage data indicates semiconductor and software net positioning has fallen to April levels, suggesting the selloff is nearing its end.

UBS trading desk anticipates momentum liquidation will bottom out by late July. Michael Romano, head of UBS hedge fund equity derivatives, advised clients to gradually rebuild positions rather than rapidly re-enter, noting improving AI fundamentals signal a buying opportunity. On July 17, UBS's momentum index reversed from a 3.5% loss to 2.5% gains within two hours, supporting expectations of a trend reversal.