J.P. Morgan: The percentage of institutional investors increasing their positions in U.S. software stocks is at a historical low

Intelligence from Zhitong Finance found that the percentage of institutional investors who increased their positions in software stocks in J.P. Morgan's position survey was 19%, the lowest in history. The percentage has been declining since 2024, starting from 51% in January and falling to 28% in July. Michael Toomey, head of TMT stock trading at J.P. Morgan, said the latest move was "interesting" given the strong performance of the software industry so far in 2024 and the price reaction in the past two weeks.

ServiceNow(NOW.US) has been the most crowded short stock for two consecutive quarters, while Snowflake(SNOW.US) has been the second most crowded short stock for three consecutive quarters, according to J.P. Morgan's pre-earnings survey of institutional investors' positions in various TMT subsectors.

"Similarly worth highlighting is that respondents named 54 different software stocks as crowded shorts, lower than the 73 we saw in our July survey. Adobe(ADBE.US) remains one of the most controversial names in the software industry," he said. The survey was conducted from September 30 to October 11.

Overcrowded longs (excluding Microsoft):

ServiceNow, Oracle(ORCL.US), Salesforce(CRM.US), SAP(SAP.US), Palantir(PLTR.US), Datadog(DDOG.US), Palo Alto Networks(PANW.US), CrowdStrike(CRWD.US), Adobe(ADBE.US), Workday(WDAY.US).

Overcrowded shorts (excluding Microsoft):

Adobe, Snowflake, Salesforce, MongoDB(MDB.US), Zscaler(ZS.US) CrowdStrike, Palantir, Atlassian(TEAM.US), Oracle.