The selloff in semis is largely driven by short selling heading into the hyperscaler prints this week, per UBS TMT: “Our PB data over the last two sessions shows HFs beginning to put on tactical shorts in U.S. Semis ahead of hyperscaler capex estimates due tomorrow and Thursday night (see chart below). That’s a notable shift. For earlier momentum unwinds, the selling was almost entirely driven by longs getting cut. This is new shorting behavior in Semis. In fact, U.S. Semis saw -2.8 standard deviations of net selling on Monday, with more than 75% of that flow driven by short sales. Meanwhile, on the other side of the ledger, hyperscalers were the most heavily bought group in U.S. equities yesterday, fueled by some good old-fashioned short covering. For context, HFs have now largely cleaned up the hyperscaler shorts they put on ahead of GOOGL earnings last week. That said, while positioning remains net long, enthusiasm has clearly come down a few notches. Hyperscaler exposure is now sitting at its lowest level in the last two years, with the current long/short ratio at 2.4x versus 13.6x at the January 2025 peak”