U.S. Semiconductor Stock 17-Day Winning Streak Sets Historical Record

Over the past two months, in addition to the ongoing Iran war, the most representative trade mainline in the stock market has been the seemingly endless rise in semiconductor stocks and the continuous heavy losses suffered by software stocks under the panic of AI disruption. Just two weeks ago, software stocks set the largest two-day decline in history relative to semiconductor stocks.

After two weeks of strong rebound with eight straight gains in software stocks, many believe this may mark the bottom of the software stocks' phase, and Goldman Sachs also released the most distinctive defense report on the software sector so far. However, the old trend has recently come back:

• Semiconductor stocks have recorded an unprecedented 17 consecutive days of gains, with the SOX ETF breaking through 10,000 points for the first time, setting the most severe overbought level in history.

• Meanwhile, the Software ETF IGV plummeted by 5%, triggered by disappointing performance guidance from ServiceNow, which once fell by 18% during the trading day, causing the software/semiconductor pairing basket to fall by 8%, setting one of the largest declines in history.

In response, Goldman Sachs' TMT expert Peter Callahan wrote in Thursday's morning report: There is quite a lot to watch on the micro level in the TMT field, which seems to drive semiconductors to outperform software again.

On Wednesday, the most frequently asked questions by Goldman Sachs' clients included:

Why did Micron Technology (MU) rise by 9%? Pure recovery?

What is the view on the 4-6% decline in Booking/Expedia?

The joint rise in the semiconductor ecosystem (Broadcom +5%, Marvell +4%)

Earnings prospects for large tech stocks (Is the market expectation too high?)

Core Data Focused by Goldman Sachs

Software and Services:

业绩参差不齐，但股价走势高度一致（下跌），至少在盘初如此。

ServiceNow: The market disputes whether its organic growth momentum matches the industry's AI enthusiasm. IBM: Software revenue growth in the first quarter declined by about 3 percentage points quarter-on-quarter. INFY: Full-year revenue guidance is +1.5% to +3.5%, which is about 5% below market expectations. HCL Tech: It fell by about 11% earlier this week due to a soft outlook.

Regarding ServiceNow, Callahan frankly said:

I previously thought the position layout before the earnings was quite attractive (especially with the NOW Knowledge conference coming up), but the market obviously stood on the opposite side. This feeling is like a déjà vu of the fourth quarter earnings (selling short-term EPS data points because the long-term uncertainties are still hanging), and the market is also disputing NOW's organic growth momentum (such as the organic implied cRPO for Q2 being about 17.25% year-over-year).

Goldman Sachs Research maintains a buy rating and sees multiple catalysts in the next six months, including the maturity of its product portfolio, the increase in customer engagement willingness, and the clarification of the GAAP profitability path (Goldman Sachs Research estimates earnings per share to exceed $9 by 2030).

As the market focus turns to SAP's earnings, Callahan distills several "macro software revelations":

Mergers and acquisitions (especially tuck-in acquisitions to accelerate AI layout) may only blur profit margins and revenue narratives.

The first quarter is usually a seasonal off-season, and the second quarter's base is even worse (the industry-level year-over-year difficulty increases by about 2 percentage points).

Macro uncertainties and disruptions from the Middle East situation.

AI pricing and product packaging are still adjusting and grinding.