HSBC's Max Kettner Says Semiconductor Rout Is Flashing Buy Signals — Here's What Drove the Selloff

On Friday, July 17, as global technology stocks suffered one of their sharpest weekly declines of the year, HSBC chief multi-asset strategist Max Kettner went on CNBC's "Squawk on the Street" and made a contrarian call: he is "really constructive on equities" because semiconductor positioning has started to flash buy signals amid the selloff .

It was the latest expression of a bullish conviction Kettner has held all year. He has maintained a "maximum overweight" on global equities throughout 2026 . In early July he said hyperscalers were back in favor amid what he called a "melt-up" moment for tech . On July 7, he told CNBC's "Closing Bell Overtime" that he was leaning more into hyperscalers than the pure semiconductor trade . But as the selloff deepened into mid-July, his tone sharpened: the damage in semiconductor positioning had become so extreme that it now looked like a buying opportunity for the broad equity market .

What exactly drove the rout, and does Kettner's contrarian call hold up? Here is the full picture.

Hedge Funds Were Selling for a Fourth Straight Week

U.S. hedge funds net-sold information technology hardware and semiconductor stocks for a fourth consecutive week through early July, according to Goldman Sachs prime brokerage data reported by Reuters . Net selling was concentrated in semiconductor and semiconductor equipment stocks, and the streak stretched across eight consecutive trading days . Even after four weeks of selling, hedge fund net exposure to semiconductors still sat at the 98th percentile — meaning almost no one was more bullish on semis than they were before the selling started . That extreme crowding is exactly the kind of positioning that, when it unwinds, can create violent selloffs — but also, in Kettner's framework, the kind of washout that sets the stage for a rebound.

The Philadelphia Semiconductor Index (SOX) fell 4.2% in the week ending July 3 alone . The VanEck Semiconductor ETF (SMH), which had surged 82% in the first half of 2026, dropped 5.4% on Wednesday and another 4.5% on Thursday in a rout marked by traders rotating out of AI-linked stocks and into other parts of the market .

AI Spending Fears Triggered the 'Melt-Up' Reversal

Investors grew anxious about whether the hyperscalers' massive AI capital expenditure outlays are sustainable . The fear: if Meta, Microsoft, Amazon, and Google are pouring tens of billions into AI infrastructure without clear returns, the spending cycle could peak sooner than expected — and the chipmakers supplying them would be the first to feel the pain . This doubt triggered sharp selling of the biggest winners from the AI boom. An index of U.S. semiconductor companies was on track for its worst week since 2025's "Liberation Day" rout . Japan's tech-heavy Nikkei 225 sank 4%, China's CSI 300 weakened 3.6%, and Nasdaq 100 futures were down 2.2% before Wall Street opened on Friday .

Even a strong earnings beat and raised sales outlook from Taiwan Semiconductor Manufacturing failed to trigger fresh gains . Instead, it prompted a "sell the news" reaction as investors used the strength as an exit window .

U.S.-Iran Hostilities and Oil Prices Added Macro Pressure

The geopolitical risk premium was a major macro headwind:

• The U.S. struck Iran for multiple consecutive days, hitting a sanctioned oil tanker near Iran's main export terminal .
• Iran responded by firing upon American military bases in Jordan, Kuwait, and Bahrain .
• President Donald Trump announced a reinstated blockade on Iranian ports, sending oil prices jumping and dampening risk appetite broadly .
• Brent crude surged on the energy supply disruption risk, compounding the risk-off mood . On July 17, Brent was hovering around $85 a barrel — well below wartime highs of roughly $118 but enough to keep inflation fears alive .
• South Korea's Kospi tumbled as much as 5.3% on chip-led losses compounded by the Middle East standoff .

By mid-July, HSBC itself said "peak fear about the Iran oil spike has passed" and moved back to its "max" overweight equity stance , but the tech rout continued through Friday, July 17, as the AI trade went into reverse .

Kettner's Full Framework: This Is Not the First Time He Has Called a Bottom

Kettner's bullish call on Friday was not an isolated event. He has been making similarly contrarian calls throughout the year. In April 2026, he said the S&P 500's closing low of 6,612 was likely to hold as the near-term bottom, hailing it as the first legitimate buy signal since the chaotic "Liberation Day" stretch . In June, he told Bloomberg that stocks don't need a specific catalyst to keep rising because the world is in a regime of structurally higher nominal growth and revenue growth .

His framework relies on sentiment and positioning signals: when the market is crowded in one direction and that position unwinds, it creates a vacuum that can be filled by a sharp reversal. He argued on Friday that semiconductor positioning had become so washed out — after four weeks of forced selling — that it now represented a buy signal for global equities, not a reason to flee .

The Bottom Line

Kettner used Friday's deepening rout to argue the opposite of the consensus fear: that the semiconductor selloff had gone too far and was now a buying opportunity. He was supported by data showing that hedge fund selling had been extreme, AI capex fears were already priced in, and the oil spike from U.S.-Iran hostilities was already fading. Whether he is right will depend on whether the fundamental story — hyperscaler AI spending, chip demand, and the sustainability of earnings growth — holds up through the next earnings season.