Hedge Funds Boost Tech Bets as AI Chip Demand Surges

Hedge funds accelerated purchases of technology stocks last week, lifting allocations to AI-linked semiconductors and chipmakers to near-record highs, Goldman Sachs Prime Brokerage data show. The pace of buying was the fastest in almost three months.

Goldman Sachs’ client note shows hedge fund exposure to global information technology stocks is at its highest level relative to the MSCI World Index in more than five years. Some individual positions are at record highs since the bank began tracking the data in 2016.

The buying was concentrated in North America and Asian emerging markets, where chipmakers and semiconductor suppliers account for a large share of investor interest.

Semiconductors and chipmakers received the bulk of inflows as funds targeted companies that supply processors, memory and equipment used in AI data centers and model training. Software companies attracted fresh speculative money, while holdings in communications equipment and IT services firms were reduced.

The client note links the activity to sustained optimism about long-term demand for AI-related compute, even as managers factor in broader economic uncertainty and geopolitical tensions tied to the Iran conflict.

The prime brokerage figures reflect hedge fund trading patterns rather than a complete measure of all market flows. The report does not name specific companies but shows capital concentrating in a subset of AI-related technology suppliers.

Over the past year, companies and cloud providers expanding compute capacity for generative AI and other models have driven investor interest in semiconductor manufacturers and equipment makers, prompting rotations of capital into firms tied to growing compute needs.