Semiconductor stocks remain very crowded, about a standard deviation above their long-term trend, although long-term crowding has eased slightly from last month, UBS analysts said in a note Monday.
Crowding refers to a situation where many similar market participants hold similar positions in a security, both long and short. High crowding scores indicate the risk that investors will change their positions: positive scores indicate long crowding, and negative scores indicate short crowding.
In the semiconductor sector, the exception is the analog and foundry sectors, which have seen long-standing crowding increase over the past month.
In terms of individual stocks, NVIDIA (NASDAQ:), Qualcomm (NASDAQ:) and Lam Research (NASDAQ:) remain the most heavily covered by UBS, while Microchip Technology (NASDAQ:) and OH Semiconductor (NASDAQ:) least crowded.
Globally, United Microelectronics (UMC) and Infineon appear to be even less busy than MCHP and ON.
AMD (NASDAQ:), previously the most controversial stock in their review, has become less popular and now displays a neutral stance, providing “a good backdrop as we expect MI300 revenue to continue to grow in the second half as supply chain performance suggests manufacturers modules remain on the right track.” “, analysts noted.
Moreover, Broadcom (NASDAQ:) has seen a significant reduction in crowding and is now testing neutrality as well.
UBS said it is also receiving more inquiries about the analogue sector, but Texas Instruments (NASDAQ:), which was upgraded several months ago, is still among the least loaded stocks in its coverage.
The biggest monthly changes among key semiconductor stocks were negative, with AMD, AVGO and KLAC posting significant declines, according to UBS.
“Investor positions in the group have also become slightly less crowded over the past month, with long aggregation falling by about 2/3 of our coverage, and most of the increase in long aggregation coming from peers,” the analysts added.