Hedge Funds Flock to Nvidia, Micron, Intel as AI Technology Gains Fresh Momentum

Hedge Funds Double Down on AI Trade in Q2 2026

Global hedge funds have sharply increased their bets on artificial intelligence-linked companies at the start of the second quarter of 2026, with semiconductor and AI infrastructure firms emerging as the biggest beneficiaries, according to the latest Goldman Sachs Hedge Fund Trend Monitor report.

The report, which analyzed holdings of 1,059 hedge funds with a gross equity position of USD 4.6 trillion, found that hedge funds lifted their net tilt to the Information Technology sector by 853 basis points, the largest quarterly increase to the sector on record. This significant shift in investment strategy saw hedge funds aggressively increase exposure to semiconductor companies, data centers, optical networking, and other AI infrastructure-related businesses, while reducing exposure to most other sectors.

Semiconductors Emerge as Preferred Way to Play AI Boom

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Hedge funds entered Q2 2026 with the most elevated long portfolio weight in Semiconductors on record, at 10 per cent. In contrast, the weight in Software marks the lowest since 2019 at 6 per cent. The largest increases occurred in Semiconductors (+428 basis points), Systems Software (+167 basis points), Tech Hardware (+147 basis points), and Application Software (+133 basis points). Goldman Sachs noted that semiconductor companies have become the preferred way for hedge funds to play the AI boom.

Top AI-Linked Companies Witness Significant Increase in Hedge Fund Popularity

Among the AI-linked companies witnessing the largest increase in hedge fund popularity were Lam Research, Applied Materials, Analog Devices, Micron Technology, and Intel. Goldman Sachs further stated that the strong rally in AI and technology stocks has significantly boosted hedge fund returns this year, with the most popular hedge fund long positions within Info Tech returning 62 per cent year-to-date.

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Mega-Cap Tech Stocks Dominate Hedge Fund Portfolios

Mega-cap technology companies continue to dominate hedge fund portfolios, with Amazon, Nvidia, Alphabet, Microsoft, and Meta Platforms emerging as the top five hedge fund long positions. Goldman Sachs noted that mega-cap tech stocks remain the most popular hedge fund long positions.

Rising Caution Among Investors

Despite the AI-driven optimism, Goldman Sachs flagged rising caution among investors. Short interest for the median S&P 500 stock has climbed to the highest level since 2011, equating to 3 per cent of market cap. Hedge funds have also raised their market exposure and leverage alongside the recent rally in technology shares, with gross leverage ranking in the 94th percentile vs. the last 5 years. The report also noted that hedge funds are increasingly using exchange-traded funds (ETFs) to gain exposure to equities, with the 4.9 per cent ETF share of hedge fund long portfolios representing the highest level since the Global Financial Crisis.