Shawn Tuteja, head of ETF and custom basket volatility trading at Goldman Sachs Global Banking and Markets Division, pointed out in the latest report that the recent momentum factor retracement of nearly 20% in the US semiconductor and AI sector was mainly driven by technical and structural factors. Shawn Tuteja believes that this momentum factor of over 20% retracement fundamentally reflects an increase in market pricing efficiency rather than a breakdown in AI trading logic. Judging from the volatility-adjusted retracement, this decline is highly consistent with the previous momentum factor's sell-off trajectory in the same achieved volatility environment; however, the market reached this level faster. According to data from Goldman Sachs's TMT trading desk, customer sentiment is currently around 7.5 to 8 points, which has cooled down from 9.5 to 10 points a month ago, but customers generally agree that the core driving force behind this pullback is technical. Goldman Sachs Prime Services data shows that in the past few weeks, fundamental long and short funds have drastically cut their AI and momentum exposure, and the total leverage ratio has now dropped to the lowest level of 10 in nearly a year. Shawn Tuteja believes that as leverage within the system is reduced and institutional positions become more balanced, investors have a tactical opportunity to “open experimental positions” in the direction of semiconductor and momentum stocks.

Shawn Tuteja, head of ETF and custom basket volatility trading at Goldman Sachs Global Banking and Markets Division, pointed out in the latest report that the recent momentum factor retracement of nearly 20% in the US semiconductor and AI sector was mainly driven by technical and structural factors. Shawn Tuteja believes that this momentum factor of over 20% retracement fundamentally reflects an increase in market pricing efficiency rather than a breakdown in AI trading logic. Judging from the volatility-adjusted retracement, this decline is highly consistent with the previous momentum factor's sell-off trajectory in the same achieved volatility environment; however, the market reached this level faster. According to data from Goldman Sachs's TMT trading desk, customer sentiment is currently around 7.5 to 8 points, which has cooled down from 9.5 to 10 points a month ago, but customers generally agree that the core driving force behind this pullback is technical. Goldman Sachs Prime Services data shows that in the past few weeks, fundamental long and short funds have drastically cut their AI and momentum exposure, and the total leverage ratio has now dropped to the lowest level of 10 in nearly a year. Shawn Tuteja believes that as leverage within the system is reduced and institutional positions become more balanced, investors have a tactical opportunity to “open experimental positions” in the direction of semiconductor and momentum stocks.