(Bloomberg) — Retail traders largely sat out a record-setting advance in chip stocks in April. Now they’re diving in just as worries mount that the group’s rally may be losing steam.
Individual investors boosted purchases of technology shares to the highest level in a year last week, according to positioning data from JPMorgan Chase & Co., with companies like memory chipmakers that benefit from all things artificial intelligence drawing the most interest. Hardware companies posted their second-largest inflow on record.
While nothing prohibits the group from rallying further, a 60% leap in the Philadelphia Stock Exchange Semiconductor Index, or SOX, over the past six weeks made just about every valuation metric look stretched. For the mom-and-pop investors who waited until May to pile into the sector, it all presents the risk of a sudden shift in momentum that could saddle them with losses.
“This earnings season validates the AI infrastructure trade as semis and memory chips delivered. Looking ahead, the market is increasingly priced for perfection,” said Dave Mazza, chief executive officer at Roundhill Financial Inc. “Retail re-engagement isn’t a bearish signal on its own, but it adds fuel to a move that’s come a long way and is starting to look parabolic.”
Link: https://finance.yahoo.com/markets/stocks/articles/retail-floods-silly-chipmaker-rally-113212726.html