Semiconductor Short Sellers Take $800M Hit From AMD Earnings Beat

Advanced Micro Devices, Inc. (NASDAQ: AMD) shares jumped 12.8% following the company’s second-quarter earnings beat this week. Semiconductor stocks traded higher in sympathy with AMD, and short sellers took a major beating.

In fact, semiconductor short sellers took an $800.3 million paper loss on Wednesday, according to S3 Partners analyst Ihor Dusaniwsky. AMD was responsible for the lion’s share of those losses, as AMD short sellers took a $495.6 million hit.

But AMD short sellers weren’t alone. NVIDIA Corporation (NASDAQ: NVDA) shares were up 2.8%, hitting short sellers with an $87 million loss. Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM) shares were up 6.8%, costing short sellers $87.1 million.

Dusaniwsky said AMD has the largest outstanding short position of any stock in the semiconductor group at $3.53 billion followed closely by Nvidia at $3.13 billion.

“Based on year-to-date and today’s mark-to-market losses there is a good chance we see short covering in AMD, Nvidia and Taiwan Semiconductor as some shorts get squeezed out of their positions,” Dusaniwsky said.

Tough Year For Semi Shorts: Year to date, AMD short sellers have endured mark-to-market losses of $1.96 billion, making AMD the worst semiconductor short of 2020. Nvidia short sellers have taken a $1.77 billion loss, while Taiwan Semiconductor short sellers are down $404.9 million.

At the same time, not all semiconductor short sellers are getting fried in 2020. Intel Corporation (NASDAQ: INTC) short sellers have turned a $446.7 million profit year-to-date, and Microchip Technology Inc. (NASDAQ: MCHP) short sellers have gained $335 million in 2020.

Overall, however, 2020 has been a disaster for semiconductor short sellers, which have logged aggregate year-to-date mark-to-market losses of $4.2 billion.

Benzinga’s Take: Short selling is inherently a dangerous venture, and shorting momentum stocks like AMD and Nvidia has been a losing trade in recent years. Given Intel’s ongoing struggles producing its 7 nanometer chips, AMD could continue to bleed short sellers for the foreseeable future.

Related Links:

What Mark Cuban Says Could Be The Greatest Threat To America's Tech, Military Future

Is Now The Time To Short Tesla's Stock?

Latest Ratings for AMD

View More Analyst Ratings for AMD
View the Latest Analyst Ratings

See more from Benzinga

• Nvidia Option Trader Bets .3M On Near-Term Upside

• Option Traders Make Big Bullish Bets On AMD, Texas Instruments

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.