U.S. Tech Hardware/Semis/Networking: How crowded are hardware and semis as we enter H2'26?

In this note, we build on our Quant Team's research on crowding across regions and sectors and estimate crowding across the hardware/semis coverage universe. As the AI picks-and-shovels thesis has gained traction, hardware and semis have become increasingly in favor, fueling concerns about crowded AI longs. Our analysis finds these concerns have merit: Communications Equipment, Semiconductors, and Computers & Peripherals are all relatively crowded subsectors even after the trade has partially unwound, in stark contrast to the long-term history in which networking and hardware often screened as out of favor. Semis and semicap coverage is generally very crowded, with 7 of 12 names in the top decile; Qualcomm is the least crowded. IT hardware crowding has polarized around AI and memory, with Apple, Western Digital, Seagate and Dell in the top decile, while HP Inc and Super Micro are in the bottom two deciles;