Woofun AI reports that hedge funds have reduced long exposures in momentum and semiconductor equities by approximately 5% of total market capitalization, representing one of the largest drawdowns on record. Net holdings in these technology segments have retreated to levels last seen in April.

UBS indicates that the liquidation cycle for momentum stocks is approaching its conclusion, with a projected bottom by the end of July. The bank advises investors to incrementally restore allocations to artificial intelligence and semiconductor names. Recent rallies in banking and industrial cyclicals are attributed primarily to short-covering; a rotation of capital back into AI assets could induce corrective pressure on these cyclical sectors.