AI Market Enters Overheated Zone, Goldman Sachs Suggests Short-Term Hedging

The nature of this round of AI market trends is undergoing a change. From the perspective of price patterns, AI-related assets have clearly entered an overbought territory, and according to Morgan Stanley data, the extent of sentiment stretching has already reached the warning level. What is more alarming is that the current buying is increasingly looking like a momentum-chasing reflex, rather than a repricing based on new catalysts.

The Philadelphia Semiconductor Index is currently more than 60% above its 200-day moving average, a deviation that has not been seen since the technology bubble from 1999 to 2000. Goldman Sachs TMT expert Peter Callahan notes that his conversations with clients have shifted from "Who will win in AI?" to "What's next?" — XPU, memory, specialty packaging, optical interconnects, CPUs, analog chips... all being discussed in turn, reflecting a market anxiously searching for new catalysts.

(The chart shows the deviation of the Philadelphia Semiconductor Index SOX from its 200-day moving average)

Micron's performance last week is the most extreme commentary on this frenzy. Callahan points out that on Friday, Micron's single-date option volume exceeded 900,000 contracts, easily setting a new record for the highest ever in the company's history, nine times the normal level, with almost no significant news on that day. Micron's weekly gain reached 38%, and from the end of March, it has accumulated a nearly 130% increase, with a market capitalization increase of nearly $50 billion, with a current total value of about $840 billion. It has surpassed JPMorgan Chase and is just one step away from the trillion-dollar club. Meanwhile, according to Morgan Stanley private brokerage data, the position crowding of analog semiconductors has reached the 100th percentile, that is, the historical highest level.

Goldman Sachs' options trading desk has clearly warned clients of the risks and provided specific hedging solutions: for the broad AI basket GSTMTAIP, buy put options with a strike price of 90% of the current price and an expiration date of May 29th, costing approximately 0.99%. The context of this recommendation is that Goldman Sachs has observed an increasing number of clients beginning to actively inquire about momentum reversal hedging tools.