One of Tech's Biggest Rotations Is Brewing

The market is seeing extreme positioning divergence between semiconductors and software, with software heavily underowned despite improving fundamentals. A rotation from the crowded semis trade into software appears imminent, supported by record-high short squeeze risk in software.

Key Takeaways

• 1.An extreme positioning dislocation exists between 'crowded' semiconductors/AI hardware and 'hated' software.
• 2.Software short squeeze risk has reached the 100th percentile relative to the past six years.
• 3.Improving fundamentals in software (accelerating growth and margins) are being ignored by the market, setting up a potential rotation.

Table of Contents

• Crowded Semis, Hated Software
• The Jaws gap
• Shorts
• Play semis downside
• IGV
• IGV upside

Document Preview

Page 1 of 3

Subscribe for full accessStart Free Trial