UBS said in a report that the selloff in momentum stocks may be nearing an end, creating opportunities for investors to start rebuilding positions in AI and semiconductor stocks.

On Tuesday (21st), China's STAR 50 Index surged more than 9%, while South Korea's tech-heavy KOSPI and Taiwan Stock Exchange Weighted Index also rallied more than 3-4% as capital started flowing back into AI-related stocks.

UBS said part of the reason for the bottoming of the tech sector is that most speculative positions have already been unwound. Hedge funds reduced long positions in momentum and semiconductor stocks by an amount equivalent to 5% of total market cap, bringing net positions in semiconductor and software stocks back to April levels.

UBS believed improving AI fundamentals signal a buy-on-dip opportunity and recommended investors gradually rebuild positions rather than rushing into the market all at once. The bank's current momentum stock portfolio includes Sandisk Corporation (SNDK.US), Broadcom Inc. (AVGO.US), Oracle Corporation (ORCL.US), KKR & Co. Inc. (KKR.US), Datadog, Inc. (DDOG.US) and Microsoft Corporation (MSFT.US).
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AASTOCKS Financial News
Website: www.aastocks.com

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