JPMorgan Warns Tech Trade May Depend More on Retail Investors Post-July Rout

The tech trade may be on the cusp of becoming even more dependent on retail investors after a rough July, according to JPMorgan's strategists.

Preliminary data from Pivotal Path suggests that hedge funds focused on technology, media, and telecommunications equities lost over 10% in July, excluding Situational Awareness, which was forced to sell its public stock portfolio due to a sharp rout in semiconductor and technology stocks.

The Philadelphia Semiconductor Index shed 21% in July, its worst month since 2008, as investors rotated out of top artificial intelligence performers amid concerns about heavy spending.

JPMorgan's Nikolaos Panigirtzoglou notes that this could lead to more stringent risk management frameworks and concentration limits for hedge funds, limiting their capacity to hold highly volatile technology stocks.