Bloomberg Surveillance · Tuesday, July 28, 2026
While markets are questioning the sustainability of high margins and new competition in the semiconductor industry, one analyst suggests the current sell-off in chip stocks is primarily driven by technical factors. Aggressive positioning and leverage in the market led to an overbought situation, and the unwinding of these positions is causing significant downside.
“I think it is, But I think before we get to the fundamentals. We have to appreciate the technicals because so much of the upside was driven by positioning chases and squeezes and flows, and so what we're experiencing now is effectively the mirror image of that because flows were so aggressive into leverage products within the semiconductor space, not just in the US, but of course in South Korea.”
“So it's important to remember narrative follows price. So all of these negative narratives on the fundamentals we're talking about, it's effectively just following the negative process.”