Viewpoint: US Stock Funds Are Shifting from Semiconductors to Software Stocks Focused on Earnings

August 11th, TMT Breakout stated in its latest report that the core change in the current US stock tech market is the ongoing repricing of AI trades internally. The Nasdaq 100 ETF saw a slight decline of about 30 basis points on the day, with trading volume continuing to slow down. As the market enters the latter half of earnings season, the tech sector has not cooled down uniformly internally. Funds are starting to shift from the previously crowded AI semiconductor chain to targets in software, internet, and cloud services that are easier to validate post-earnings.

TMT Breakout believes that investors are now seeking companies with "accelerating performance, improving narratives, and valuation pullback." Software stocks like PLTR, TWLO, and TEAM continued to attract buying interest post-earnings, indicating that the market is willing to reprice for growth certainty. In contrast, the AI semiconductor sector has shown weaker performance afterwards. Even if some companies' performance or guidance is not poor, their stock prices struggle to attract incremental funds.

TMTB explained that after a previous crowded uptrend in AI semiconductor trading, investors have become more selective in realizing short-term gains and narratives. The storage sector, represented by Micron, still faces supply-demand tension logic, while Western Digital is gaining attention due to improved NAND profit visibility. However, the overall semiconductor sector is finding it difficult to rally broadly based on the simple premise of "strong AI demand." Funds will be more inclined to look for targets outside the AI chain that can still benefit from enterprise IT spending and cloud computing expansion.

The macro environment has also intensified this rotation. TMTB mentioned that prior to the CPI release, oil prices rose by about 5%, US bond yields rose by 4 to 6 basis points, and the market became more sensitive to interest rates and inflation. In this context, high-valuation, highly crowded momentum trades are under pressure, while companies that can provide evidence of cash flow, orders, or demand post-earnings are more likely to attract funds.