Chip Stocks Face Fourth Week of Hedge Fund Exits Before Key Earnings

Key Takeaways

• Goldman Sachs reports hedge funds have now sold semiconductor and tech hardware stocks four weeks in a row
• Semiconductor benchmark SOX index declined 4.2% during the week through July 3
• Foxconn’s better-than-anticipated quarterly revenue fueled optimism about AI hardware demand
• Samsung Electronics set to announce profit surge of 18 times year-over-year on Tuesday
• Tech-heavy Nasdaq 100 futures rallied 1% Monday morning as sector shows signs of stabilization

U.S.-based hedge funds have maintained their exodus from technology hardware and semiconductor equities for a fourth straight week, according to Goldman Sachs client communications issued Friday. This sustained divestment arrives as major chip companies prepare to unveil quarterly financial results.

The semiconductor-focused SOX index experienced a 4.2% decline during the trading week that concluded July 3. This downturn signals mounting investor anxiety regarding artificial intelligence infrastructure spending velocity and timeline for return on investment.

According to Goldman Sachs analysis, information technology — encompassing both semiconductors and hardware manufacturers — represented the most heavily net-sold U.S. equity sector for four consecutive weeks. During this timeframe, hedge funds simultaneously offloaded industrial and consumer discretionary positions.

For the third week running, hedge fund activity showed more aggregate selling than buying. The majority of last week’s divestment focused on individual U.S. equities rather than broad-market index instruments.

While reducing tech exposure, hedge funds simultaneously increased positions elsewhere. They accumulated commercial services, consumer staples, real estate, and energy sector stocks. Additionally, they purchased index and ETF products designed to track broader market performance.

Technology Index Futures Rebound Monday

Notwithstanding recent selling activity, U.S. equity futures advanced Monday morning. Nasdaq 100 futures surged 1%, while S&P 500 futures gained 0.4%. Dow Jones futures remained relatively flat following a record-breaking performance during the abbreviated holiday trading week.

The recovery followed Foxconn’s Sunday announcement of quarterly sales exceeding analyst expectations. As a critical supplier to Nvidia, Foxconn’s performance indicates sustained appetite for AI infrastructure components, providing relief to battered semiconductor valuations.

Samsung Quarterly Results Anticipated

Market focus shifts to Samsung Electronics, scheduled to release quarterly earnings Tuesday. Analysts project the world’s dominant memory chip manufacturer will report profit growth of approximately 18 times versus the comparable year-earlier period, surpassing its entire 2025 annual total.

JPMorgan strategists recently elevated their S&P 500 price target, citing the artificial intelligence supercycle as a catalyst for continued index appreciation. They cautioned, however, that volatility should be anticipated along the way.

On the macroeconomic front, investors are monitoring U.S. services sector data published Monday. A disappointing June employment report has already recalibrated market expectations regarding monetary policy trajectory. Federal Reserve meeting transcripts, the inaugural release under newly appointed chair Kevin Warsh, are scheduled for Wednesday.

While hedge funds may be crystallizing gains or hedging against potential semiconductor sector weakness, Monday’s futures activity suggests certain investors view the recent pullback as an attractive entry point.

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