The earnings season for tech giants is approaching, and the market seems quite complacent, with Goldman Sachs warning of ongoing risks.Since the low in April, the S&amp;P 500 index has risen by 26%, primarily driven by tech stocks. In the next two weeks, 50% of the weighted stocks in the tech sector ETF XLK will report their earnings. This Wednesday, Google's parent company Alphabet and Tesla will be the first to announce their Q2 results, followed by IBM and Texas Instruments.It is worth noting that Goldman Sachs data shows that the current market's expected volatility for tech stock earnings days has dropped to its lowest level in 20 years, at just 4.7%, and this unusual market calm often suggests potential risks.Additionally, Goldman Sachs analysts pointed out that the tech sector currently accounts for about 34% of the S&amp;P 500, with a market capitalization of approximately $18.5 trillion, a concentration that rivals the historical peak during the 1999-2000 tech bubble.<h2>Semiconductor Stocks: The Most Crowded Investment Target</h2>The semiconductor sector is currently the most crowded investment target in the technology, media, and telecommunications (TMT) space, seen as the purest way to express enthusiasm for AI. Despite being widely held by various investors, including pure long funds, hedge funds, and retail investors, Goldman Sachs continues to observe sustained inflows into this sector.NVIDIA received a perfect score of 10 in institutional holding concentration ratings. The stock has rebounded over 90% since the low in early April, with a year-to-date increase of 25%, reaching a market capitalization of $4 trillion, and is expected to exceed expectations and raise guidance again when it reports earnings at the end of August. Broadcom, while ranked behind NVIDIA in investor preference, remains a popular thematic investment target.The most popular long positions include NVIDIA, Broadcom, Taiwan Semiconductor, Micron Technology, Texas Instruments, Analog Devices, and Microchip Technology. The most popular short positions include Intel, ON Semiconductor, Qualcomm, Skyworks Solutions, Qorvo, and GlobalFoundries.<h2>Software Stocks: Sentiment Continues to Decline</h2>The software sector is showing a trend opposite to that of semiconductors, with Goldman Sachs data indicating that the long-short ratio in this sector has fallen to a multi-year low. Aside from leading companies like Microsoft and Oracle, market sentiment towards the software sector as a whole continues to decline, primarily due to uncertainty about the long-term impact of AI on enterprise and cloud software businesses.Microsoft received a concentration rating of 9 in institutional holdings, with its market capitalization increasing by $650 billion this year to nearly $4 trillion, successfully breaking through an 18-month consolidation pattern. Investors expect its Azure business to grow by over 30% this quarter.The most popular long positions in software stocks include Microsoft, Snowflake, Oracle, ServiceNow, and CrowdStrike. Short positions include Adobe, Workday, Atlassian, Paycom, and Monday.com.<h2>Internet Giants: Balancing Valuation and Growth Story</h2>The long-short ratio in the internet sector is about 4.5 times, sitting at the median level of recent ranges. Investors need to seek a balance between high valuations and strong long-term growth stories.META received a rating of 8.5, and although it is still widely held, recent cautious sentiment has increased. The company's hiring increase and off-balance-sheet data center investments have reignited discussions on ROI. Amazon has a rating of 8, but has only risen 3% this year, underperforming, facing tariff uncertainties and doubts about the growth of its AWS cloud business.Google's rating is only 6.5, with institutions significantly reducing their holdings, viewed as an important underweight target for mutual funds and hedge funds. The market generally expects a reaction pattern of &#34;earnings exceeding expectations but stock price declining,&#34; and the DOJ ruling in August may limit its stock price performance.The most popular internet stocks for long positions include META, Spotify, Netflix, Amazon, and Take-Two. Short positions include Snap, Etsy, Reddit, Expedia, and Lyft.<h2>Mag7 Holdings Concentration Hits New High</h2>The current total leverage ratio of hedge funds is close to multi-year highs, while Mag7 stocks account for about 16.5% of the net exposure of U.S. stocks.Goldman Sachs suggests that investors consider hedging their tech stock exposure by purchasing 5% out-of-the-money put options on the S&amp;P Technology Sector ETF (XLK) with a three-month term. Over the past year, the correlation between tech stocks and momentum factors has reached 92%, meaning any momentum reversal could have a significant impact on tech stocks.Goldman Sachs points out that the XLK three-month put options will cover the upcoming tech earnings release period, the Federal Reserve meetings on July 30 and September 17, as well as several important data releases. However, if the stock price is above the strike price at expiration, the option buyer will face the risk of losing the entire premium

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From a sector perspective, the semiconductor sector is currently the most crowded investment target in the TMT field, with NVIDIA, Broadcom, and Taiwan Semiconductor being the most popular long positions; the sentiment in the software sector continues to decline, with only leading companies like Microsoft and Oracle having positive expectations; the long-short ratio in the internet sector is at a median level, and investors are still focused on the ROI of corporate AI applications

- The upcoming earnings season for tech giants has led to a complacent market, with Goldman Sachs warning of potential risks.  
- The S&P 500 has risen 26% since April, driven by tech stocks, while the volatility expectation for earnings reports is at a 20-year low of 4.7%.  
- The semiconductor sector remains a crowded investment area, with Nvidia and Broadcom being popular, while software stocks face declining sentiment due to uncertainties surrounding AI's long-term impact.

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The second quarter earnings reports of American tech stocks are coming! Here’s everything you need to know in advance