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UBS Trading Desk Tells Clients the AI and Chip-Stock Selloff Is Near Bottom, Urging Gradual Buying

July 20, 2026 at 23:44 EDT

Finance
Infra & Chips

UBS's trading desk has told clients that the sharp selloff hammering momentum stocks may be close to running its course, opening a window for investors to begin rebuilding positions in artificial-intelligence and semiconductor shares. The view was laid out in a client note by Michael Romano, the bank's head of hedge fund equity derivative sales, and reported on July 20, 2026.

July 20, 2026 · UBS Trading Desk

"Buy the Dip": UBS Says the AI & Chip Selloff May Be Nearly Over

Hedge funds have slashed exposure to momentum and semiconductor stocks at a near-record pace — and UBS reads the washed-out positioning as a window to scale gradually back into AI names.

~5%

Of gross market value unwound — among the largest cuts on record in UBS prime-brokerage data

April

Net positioning in chips & software back to levels last seen months earlier

End of July

When UBS suggests the momentum unwind could bottom out

Positioning: crowded → cleared out

How far net exposure to semis & software has fallen — the one-directional trade has been largely flushed out.

Crowded peak

before the unwind

→

April levels

where net exposure sits now

The Call — and the caution

A temporary correction driven by de-risking — not a break in AI fundamentals. But don't go all-in.

Light positioning leaves room to bounce if buyers return

Scale in gradually — don't chase a rapid recovery

Watchlist: SanDisk, Broadcom, Oracle, KKR, Datadog, Microsoft

Constructive view

Improving AI fundamentals; weakness is a "buy the dip"
Some chipmakers already showing early stabilization
UBS ranks AI semis, memory & infrastructure near the top

The caveats

Skepticism about the AI theme's durability persists
A momentum rebound may come at other sectors' expense
No price targets disclosed; private note limits verification

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