Goldman Sachs released a research report showing that, driven by renewed market enthusiasm for artificial intelligence related companies, hedge funds bought technology stocks last week at the fastest pace in nearly three months. The buying was broadly distributed, with technology stocks being increased across all major global regions except Europe. In dollar terms, North America and emerging markets in Asia saw the largest inflows. Goldman Sachs (GS) stated that these flows reflect both new long positions and short covering, as funds increase their allocations to companies viewed as direct beneficiaries of the AI boom.
This move is one of the clearest signals that hedge funds have re-established confidence in technology stocks after recent global market volatility. According to Goldman Sachs’ statistics, the net long exposure to the global information technology sector saw its largest increase in more than five years. Currently, hedge fund holdings in global technology stocks are nearing the highest levels since Goldman Sachs’ prime brokerage business began tracking this data in 2016. Buying has been concentrated in areas most closely linked to AI infrastructure and applications, with chip manufacturers remaining a primary focus and software companies also seeing strong demand. This renewed buying suggests that hedge funds are increasingly willing to increase risk exposure in areas where earnings growth is considered more resilient, and AI remains a core theme for professional investors.
From a regional perspective, North America was the region with the largest volume of technology stock buying, reflecting the high concentration of major technology and semiconductor companies in the region. Emerging markets in Asia also saw significant inflows, driven by demand for companies involved in the semiconductor supply chain and AI infrastructure development. Europe was the only region where hedge funds did not buy technology stocks that week, perhaps because the European market has relatively less exposure to global AI leaders. At the sector level, semiconductor and software companies were bought, while IT services and communications equipment companies were sold, indicating that investors are becoming more selective within the sector.
Goldman Sachs noted that hedge funds’ overweight position in information technology, relative to the MSCI All-Country World Index, is currently at its highest level in more than five years, approaching historical records. The report stated that technology is a major theme for Goldman Sachs and its clients, with a significant overweight in technology stocks. This positioning suggests that hedge funds are not merely chasing short-term momentum but are viewing AI-related technology stocks as a core component of their portfolios. Although the conflict in Iran is putting pressure on the global economy, chip manufacturers have so far avoided the worst impacts, which has boosted investor confidence. However, with positions nearing historical highs, any negative news regarding earnings, AI spending plans, or the macroeconomic environment could trigger a sharp reversal. For now, hedge funds continue to bet on the AI theme, with semiconductor and software stocks at the core of the latest wave of buying.
