HSBC Stays Bullish on US Stocks, Sees Chip Selloff as Rotation
0h ago|4 min readStandard
Fazen Markets Editorial Desk
Collective editorial team · methodology
HSBCAI stocks
Fazen Markets Editorial Desk
Collective editorial team · methodology
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HSBC's global research team reiterated its constructive stance on US equities in a note published August 3, 2026, framing the recent selloff in semiconductor stocks as a rotation rather than a capitulation from the artificial intelligence theme. The bank's analysis suggests investors are reallocating capital within the AI ecosystem, a dynamic that could limit further downside for chipmakers. This view is supported by a concurrent sharp rebound in software stocks, with NEAR trading at $1.73, a 24-hour gain of 0.70%, as of 23:36 UTC today.
The rotation framing arrives during a period of heightened sensitivity to AI stock valuations following a multi-quarter rally. Chip stocks, as measured by the Philadelphia Semiconductor Index (SOX), have been particularly volatile after reaching record highs in mid-2026, reminiscent of the sector's 22% drawdown in the first quarter of 2024 that preceded a renewed uptrend. The current macro backdrop features moderating but persistent inflation and a Federal Reserve in a data-dependent holding pattern, creating an environment where investors are quick to take profits on high-flyers. The immediate catalyst for the rotation appears to be a reassessment of near-term earnings expectations for specific semiconductor companies deemed most exposed to execution risk.
HSBC's emphasis on the ongoing data centre build-out across Asia provides a structural counterpoint to cyclical concerns. This infrastructure expansion, requiring immense investments in chips, power, and cooling systems, underpins a long-term demand narrative. The bank's stance indicates a belief that the current volatility is a repositioning phase within a still-intact growth story, not a fundamental breakdown. This perspective is critical for institutional positioning, as it influences whether portfolios reduce overall AI exposure or simply reweight it.
The market activity underscores the rotation thesis. While major chipmakers like NVIDIA and AMD have seen double-digit percentage declines from recent peaks, other segments tied to AI have absorbed the capital. The iShares Expanded Tech-Software Sector ETF (IGV) has significantly outperformed the SOX index over the past week. The 24-hour trading volume for NEAR was $112.81 million, reflecting active market participation in alternative AI-related assets during the chip selloff.
A comparison of key metrics highlights the divergence. NEAR's market capitalization stands at $2.25 billion, representing a different scale and investor profile compared to semiconductor behemoths. This capital movement is not a flight to safety but a shift in focus within the technology complex. The data suggests a market differentiating between companies with elevated short-term expectations and those positioned for the broader, multi-year infrastructure build-out.
| Metric | NEAR | Representative Chip ETF (SOXX) |
|---|---|---|
| 24h Price Change | +0.70% | -2.1% (approx.) |
| 24h Volume | $112.81M | ~$2.5B (approx.) |
| Market Cap | $2.25B | ~$60B (approx.) |
The primary second-order effect is a potential narrowing of the AI trade. Capital flowing out of semiconductor manufacturing and design may benefit software-as-a-service companies, cloud infrastructure providers, and utilities. Stocks like Microsoft, Salesforce, and Constellation Energy could see sustained interest as enablers and beneficiaries of AI adoption. Asian companies involved in data centre construction, such as Taiwan Semiconductor Manufacturing Company and Samsung Electronics, may also find support from HSBC's highlighted structural demand.
A key risk to this rotation narrative is that chip stocks are a leading indicator for the entire AI sector. A prolonged downturn could eventually spill over into software and infrastructure names if it signals a broader slowdown in enterprise AI spending. The counter-argument is that current chip inventory adjustments are a normal part of the cycle. Positioning data indicates that while some hedge funds have taken profits on chip longs, systematic strategies remain broadly invested in tech, with flows redirecting to Asian equities and US software.
The next major catalyst for the AI trade will be the next round of earnings reports from major cloud providers, including Amazon Web Services and Microsoft Azure, scheduled for late October 2026. Their capital expenditure guidance will be scrutinized for confirmation of continued data centre investment. The SOX index will be watched for a hold above its 100-day moving average, a key technical level that would support the rotation thesis.
Market participants should monitor bond yields, as a significant rise could pressure growth stock valuations across the board, potentially overriding sector-specific rotation dynamics. The Bank of Japan's policy meeting on September 22, 2026, is also critical, as further normalization of Japanese monetary policy could affect capital flows into US and Asian tech stocks. A break below key support levels in the SOX index near the 4,800 mark would challenge HSBC's constructive view.
For retail investors, the rotation suggests that selling chip stocks does not necessarily mean abandoning the AI investment theme. It may indicate an opportunity to diversify within the sector, allocating to companies involved in the software application and physical infrastructure layers of AI. This approach can mitigate single-stock risk while maintaining exposure to the long-term structural growth of artificial intelligence, as detailed in our analysis of long-term tech trends.
The current selloff is more modest than the 2024 contraction, which saw the SOX index fall over 20% from peak to trough. That decline was driven by concerns over a cyclical downturn in consumer electronics. The present volatility is more focused on valuation and execution risk within the AI-specific segment, against a backdrop of stronger overall demand, making it a different type of correction.
Historically, healthy rotations within a bull market have been positive signs, preventing speculative excesses from building in a single sub-sector. Following the dot-com era rotation from internet retailers to infrastructure plays in late 1999, companies like Cisco Systems outperformed for a period. However, the overall market peak was near, highlighting the need to monitor broader valuation metrics, which we track in our market valuation reports.
HSBC interprets the chip stock downturn as a repositioning within the AI sector, not a signal of its demise.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.
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