Semis just got tagged as Wall Street’s favorite crowd

The crowd is getting uncomfortable

Bank of America’s May Global Fund Manager Survey basically threw a giant neon sign over the chip trade: 73% of professional investors now call long global semiconductors the most crowded trade on the planet. That’s up from 24% in April. Translation: the stampede into AI chips and the broader semiconductor stack has gotten so packed that even the bulls are starting to look around for the exits.

Why this matters for your portfolio

When a trade gets this crowded, it doesn’t need a full-blown disaster to wobble. It just needs a little bad news, a higher bond yield, or a mood swing from “AI supercycle forever” to “maybe let’s take some chips off the table.” Nvidia, AMD, Micron, Intel, and the sector ETFs SMH and SOXX have all been the darlings of the move, and Nvidia is set to report earnings on Wednesday, which gives the whole group an extra excuse to be jumpy.

• Fund managers’ equity exposure just ripped from net 13% overweight to 50% overweight in one month.
• Cash levels slid to 3.9%, the lowest in a while and a classic “everyone’s feeling brave” signal.
• BofA’s Bull & Bear Indicator is sitting at 7.8, basically tapping the firm’s usual pullback alarm.

The not-so-secret warning label

This isn’t the same as saying semis are broken. It’s saying expectations are packed so tightly into the trade that even a modest reset can hit like a chair leg on a bare foot. BofA’s own strategist says the market is inching toward profit-taking territory, and the survey shows tech is now the biggest overweight since early 2024.

Big picture: semis may still be the engine of the market, but when the boat gets this crowded, you don’t need a storm to feel seasick.