GAM: Semiconductor Selloff Not Yet a Buying Opportunity
Alina Collins
GAM's global equity head Paul Markham says the chip sell-off has not yet created a buying opportunity because investor positioning remains too crowded; he advises trimming tech exposure and waiting for a better entry later this year.
Why isn't this the time to buy the dip?
GAM global equity head Paul Markham told Bloomberg TV on Tuesday that the semiconductor sell-off has not yet formed a buying opportunity.
The core reason: too many investors are on the same side of the boat, and that overcrowding has not unwound.
This means → even after a meaningful decline, the positioning imbalance still leaves room for further downside.
What triggered this round of selling?
Chip stocks sold off sharply on Tuesday as markets questioned whether lofty valuations and unprecedented AI spending can be sustained.
Adding pressure: reports that a Chinese state-backed company has begun mass-producing chipmaking equipment, intensifying competition fears.
In plain terms = a two-front squeeze — "is all this AI spending worth it?" on one side, "China is catching up" on the other.
Does the AI investment thesis still hold?
Markham believes the overall AI investment logic remains intact and that some AI-linked stocks still have solid fundamentals.
He singled out SK Hynix: as margins expand and pricing strengthens, investors should be willing to pay a higher premium.
This means → he is not bearish on AI itself — he simply thinks prices have not fallen far enough to justify re-entry.
What risk does thin summer volume add?
Markham noted that low summer trading volumes are amplifying volatility, raising the odds of sharp sector rotations.
In plain terms = fewer participants means each large order moves prices more — swings get bigger in both directions.
What should investors do next?
Markham's advice: keep tech exposure but reduce the weighting, and wait for a better entry point in the coming months.
He said: "I do think there will be a pause and a period of reflection — perhaps a little later in the year."
This week Meta and Amazon report earnings; their capital-expenditure plans will be closely watched to test whether the AI spending outlook can support current valuations.
Content is for reference only, not financial advice.