BofA: Active long-only funds sold $44.4 billion in semiconductor stocks last month

On August 25, BofA data showed that active long-only funds significantly reduced their holdings of global semiconductor stocks last month, with sales totaling approximately $44.4 billion, indicating that institutional funds are exiting the most crowded AI trades. Fund flows have shifted toward telecommunications, energy, materials, and power grid modernization, reflecting a more pronounced rotation within the AI theme. This data explains part of the recent market pressure. Ahead of Nvidia's earnings report, the market still holds high expectations for AI demand, but chip stocks had already rallied excessively and positioning had become more concentrated. Should long-term interest rates rise, AI revenue expectations cool, or cloud vendors' capital expenditure returns come into question, semiconductor stocks would be the first to face selling pressure. BofA also noted that over the past year, the most sold themes by funds included AI computing and quantum computing, suggesting that capital has not fully exited AI but is rather reducing exposure to overcrowded segments. BofA expects chip stocks to remain driven in the short term by Nvidia's results, cloud vendor guidance, and interest rate trends; in the medium term, funds may prefer sub-sectors such as power, equipment, and storage that can benefit from AI infrastructure spending.