Nvidia, Broadcom among semis to see 'greatest expansion' by fund managers: BofA

Seeking Alpha
2024.10.01 08:39
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Bank of America reports that the semiconductor industry is stabilizing, with Nvidia and Broadcom seeing significant ownership increases among fund managers. Nvidia is the most owned stock at 70%, while Broadcom's ownership rose by 628 basis points. The industry's relative weighting is now at 1.01x, down from 1.18x in July 2023. Other notable changes include Qualcomm's 619 basis point increase and AMD's 98 basis point decrease in ownership. Overall, long-only investors are most overweight in Microchip and Texas Instruments, while hedge funds favor Qorvo and Teradyne.

The semiconductor industry was in focus on Tuesday as Bank of America showed recent data that indicated relative weighting for the industry was "flattish" amongst active managers, following a steady decline between Jul 2023 to July 2024.

"Semis [relative] weighting of 1.01x (flat QoQ) is now stabilizing near equal-weight level (1.00x) following a steady decline between Jul ’23 (1.18x) to Jul ’24 (1.00x), though still well below peak (1.36x in Mar’17)," analyst Vivek Arya wrote in a note to clients.

Nvidia (NASDAQ:NVDA) remains the most widely owned stock, owned by 70% of fund managers, with that percentage having grown 188 basis points quarter-over-quarter and 600 basis points year-over-year, Arya added. Its relative weighting of 0.99 is still below the top 16 owned tech and communications services peers, which average a weighting of 1.1.

Nvidia, Broadcom (NASDAQ:AVGO), Qualcomm (NASDAQ:QCOM) and Analog Devices (NASDAQ:ADI), saw the greatest expansion in ownership quarter-over-quarter, Arya said, citing the data.

Conversely, the greatest declines came from Intel (INTC), Lam Research (LRCX), On Semiconductor (ON), Cadence Design Systems (CDNS) and AMD (AMD).

The greatest increase in depth and overweighting belong to Qorvo (QRVO), Teradyne (TER), Analog Devices, Texas Instruments (TXN) and Synopsys (SNPS), while the greatest decrease in weighting belong to On Semiconductor, Intel, Microchip Technology (MCHP), Micron (MU) and AMD, Arya wrote.

The data also showed that long-only investors are the most overweight Microchip, On, Texas Instruments, Applied Materials (AMAT) and Intel, while Qorvo, Teradyne, Lam Research and Qualcomm were the chip stocks most overweight at hedge funds.

Broadcom is owned by 52.2% of fund managers and saw a 628 basis point increase in ownership quarter-over-quarter. Applied Materials (AMAT), owned by 40.1% of fund managers, saw a 39 basis point increase in ownership quarter-over-quarter.

AMD is owned by 38.5% of fund managers and saw a 98 basis point decrease quarter-over-quarter, while Qualcomm — which is owned by 33.5% of fund mangers — saw a 619 basis point increase quarter-over-quarter.

Lam Research (owned by 31.6% of fund managers) rounded out the top six changes, with a 136 basis point decline quarter-over-quarter.

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