The rotation framing matters for positioning, since it implies investors are reallocating within the AI trade rather than abandoning it, which could limit further downside in semiconductor names once portfolio reshuffling runs its course. The sharp rebound in software stocks alongside the chip pullback supports that reading, suggesting capital is moving toward names seen as less exposed to elevated earnings expectations rather than exiting the broader AI theme. HSBC's emphasis on Asia's data centre build-out points to a longer-term structural demand story across chips, equipment, cooling and power, which could offer support for the sector's supply chain even if near-term sentiment on individual chipmakers remains choppy. The bank's continued overweight stance on US equities, paired with selective conviction in Asian AI infrastructure, suggests it sees the current volatility as a repositioning phase within a still-intact growth narrative rather than a turning point.---HSBC note on Friday says the sharp pullback in chip stocks looks like rotation into software rather than a broader retreat from the AI trade.Summary:HSBC maintains a mild overweight on US equities, citing resilient economic growth, broadening earnings, and continued AI leadership.The bank views the recent pullback in semiconductor and memory stocks as rotation rather than capitulation, driven by investors reassessing whether profit growth can meet elevated expectations.Chip and memory names including Samsung, SK Hynix, Intel and Micron have each fallen by roughly a third over the past month.Software stocks have rebounded strongly, with the Morningstar Global Software-App Index up around 16% from its June low and firms including Salesforce, Workday and ServiceNow rising sharply over the past week.HSBC still sees the structural AI theme as intact, maintaining positions across the AI ecosystem in Asia including power, infrastructure and industrial automation, and notes intensifying model competition and rising pricing pressure as the subsidised AI era fades, pushing providers toward monetisation models such as Model-as-a-Service.In China, the bank has observed renewed investor preference for biotech, internet platforms, hyperscalers and EVs.HSBC projects AI capital expenditure rising from below $400 billion in 2025 to more than $1 trillion by 2028, and expects Asia's data centre capacity to more than double by 2030 to around 40% of global capacity.HSBC has reiterated its generally bullish stance on US equities, arguing that resilient economic growth and continued strength in artificial intelligence leave the case for staying invested largely intact, even as semiconductor stocks have come under pressure in recent weeks.The bank said it maintains a mild overweight position on US equities, pointing to resilient economic growth, broadening earnings across sectors, and continued AI leadership as the key supports for that stance. On the recent weakness in chip and memory stocks, HSBC analysts characterised the move as rotation rather than a genuine retreat from the sector, saying the pullback reflects investors reassessing whether profit growth can keep pace with elevated expectations rather than a decision to exit the space altogether.The scale of the move has been notable. Semiconductor names including Samsung, SK Hynix, Intel and Micron have each fallen by roughly a third over the past month. At the same time, software stocks, an area HSBC describes as sometimes unloved, have come back into favour. The Morningstar Global Software-App Index has rebounded around 16% from its June low, and companies such as Salesforce, Workday and ServiceNow have seen their share prices rise sharply over the past week, reinforcing the bank's view that capital is rotating within the broader technology trade rather than leaving it.HSBC said it continues to view the structural AI theme as intact, maintaining positions across the AI ecosystem in Asia, spanning power, infrastructure and industrial automation. The bank noted that competition among AI models is intensifying and that pricing pressure is building as the era of subsidised AI access fades, pushing providers toward monetisation approaches such as Model-as-a-Service. In China specifically, the bank said it has observed renewed investor preference shifting toward biotech, internet platforms, hyperscalers and electric vehicle makers.Underpinning HSBC's broader conviction is its outlook for AI capital expenditure, which the bank projects will rise from below $400 billion in 2025 to surpass $1 trillion by 2028, a trajectory it expects to generate meaningful new revenue opportunities for businesses across the AI supply chain. The bank also pointed to Asia's growing role in the global data centre build-out, forecasting that the region's data centre capacity will more than double by 2030 to account for around 40% of global capacity. That expansion, HSBC said, should support demand across the full data centre supply chain, including chips, semiconductor equipment, cooling systems, servers, commodities, on-site power generation and energy storage, a thesis the bank has framed as its High Conviction call on Asia's data centre boom. This article was written by Eamonn Sheridan at investinglive.com.