Thomas Thornton

Nvidia is overvalued relative to its earnings trajectory and is part of the overcrowded semiconductor trade. He explicitly covered part of his Nvidia short at the lows but remains short, expecting a correction as positioning unwinds.

Extreme positioning in semiconductors, with record fund flows into the DRM ETF and 20% of hedge fund client weight, suggests a crowded trade that is vulnerable to a sharp reversal. The semiconductor index has made new relative highs versus technology, but the narrow leadership and euphoric retail speculation (Korean investors cashing in life insurance to buy memory stocks) indicate a top. Fundamentals are strong but positioning trumps them.