Bank of America: Nvidia and Broadcom have the widest holdings, with Micron and AMD significantly added by actively managed funds

According to the news from Zhitong Finance APP, Bank of America stated that among active fund managers in the United States, Nvidia (NVDA.US) and Broadcom (AVGO.US) have the most "extensive" holdings base in the semiconductor sector, while the proportion of holdings in Micron Technology (MU.US) and AMD (AMD.US) has also risen significantly.

Bank of America analyst Vivek Arya wrote in a report to clients that, according to the bank's August equity strategy data, the relative weighting of the semiconductor industry stands at 1.15 times, higher than that of the software sector at 0.92 times and information technology sector at 0.99 times. The relative weighting of the semiconductor sector is up from 1.08 times in May and is approaching the peak of 1.18 times reached in April 2023, since the launch of ChatGPT.

Although Nvidia and Broadcom have the broadest coverage in the S&P 500 Index for holdings, followed by AMD, not all semiconductor stocks are held to the same extent. Skyworks Solutions (SWKS.US) is the chip stock with the least fund holdings, at just 3%, followed by Microchip Technology (MCHP.US) and ON Semiconductor (ON.US), at about 6% and 7%, respectively.

Fund managers are most overweight in Ciena (CIEN.US), Amphenol (APH.US), KLA (KLAC.US), and Western Digital (WDC.US), while they are most underweight in Skyworks Solutions, ON Semiconductor, Microchip Technology, and Qualcomm (QCOM.US).

Moreover, analysts found that fund positions have already concentrated in the areas of computing, storage, and semiconductor equipment, with their holding proportions at 74%, 43%, and 40%, respectively. Of these, the storage sector saw the largest increase in holdings, rising by 612 basis points compared to July; the semiconductor equipment sector rose by 324 basis points.

Analysts explained: “Holdings in the storage sector continue to surge, AMD holdings exceed 50%, analog chips/EDA are cooling; in individual stocks, Micron holdings increased by 608 basis points month-over-month to 50%, now ranking fourth among all semiconductor stocks held by funds. Meanwhile, Nvidia’s holding ratio rose to 82%, and AMD to 51% (relative weighting up 7% month-over-month, up 75% quarter-over-quarter).”

Analysts further pointed out: “SanDisk (SNDK.US) holdings jumped 897 basis points month-over-month to 24%, the largest increase among all individual stocks. The relative weighting for the analog chip sector decreased by 4% month-over-month, and the EDA sector decreased by 5%. Intel (INTC.US) holdings continued to rise, up 205 basis points month-over-month to 21%, but despite being fifth in market capitalization, it only ranks 19th in holdings. Nvidia and Broadcom are the only two semiconductor stocks on the most widely sold list to fund the SpaceX IPO, with funds selling holdings worth $4.4 billion and $2.7 billion, respectively, both with participation from 44 funds each. However, the approximately 1.2% short position ratio in both may indicate a deleveraging operation of long positions; currently, about 53% of funds hold SpaceX.”

The data also shows other notable findings include: compared to long-only investors, hedge funds prefer Seagate Technology (STX.US), Teradyne (TER.US), SanDisk, Synopsys (SNPS.US), and Arista Networks (ANET.US).

Compared to hedge funds, Skyworks Solutions, Western Digital, Marvell Technology (MRVL.US), Monolithic Power Systems (MPWR.US), Microchip Technology, NXP Semiconductors (NXPI.US), KLA, Intel, Corning (GLW.US), and Qualcomm have higher weightings among long-only investors.