Hedge Funds Stay With Big Tech as AI and Semiconductor Trades Dominate April Positioning

Hazeltree’s latest positioning data shows that hedge funds continued to favor companies with strong fundamentals in April, especially technology and semiconductor stocks. Among mega-cap names, Meta and Amazon experienced more than a 5% month-over-month increase in the number of funds holding long positions. Nvidia saw a 4.5% decline in the number of funds holding it, but it remained one of the most favored long positions in semiconductors, suggesting that hedge funds reduced exposure selectively rather than abandoning the AI hardware trade altogether.

The semiconductor trade remained one of the clearest signs of hedge fund conviction. Hazeltree said the share of companies in the Philadelphia Semiconductor Index where hedge funds held net long positions rose to 57% in April from 53% in March. Crowding on the long side was strongest in Nvidia, followed by Broadcom and Lam Research, while crowded short positions were concentrated in ON Semiconductor, Microchip Technology, and Monolithic Power Systems. This positioning shows that hedge funds are not simply buying the entire chip sector blindly; they are separating perceived winners from names they believe may face weaker fundamentals or valuation pressure.

The April backdrop helps explain why hedge funds stayed with technology leaders. Reuters reported earlier this month that the S&P 500 rallied more than 10% in April, while tech-focused stock pickers returned nearly 19%, a record result according to Goldman Sachs data cited by Reuters. Stock pickers overall returned more than 9%, their best monthly performance since Goldman began tracking the data in 2016. In that kind of market, high-quality technology and semiconductor names offered both momentum and earnings-growth exposure, making them natural targets for hedge funds trying to capture the rebound.

Still, the same data also points to risk. When many hedge funds cluster into similar long positions, the upside can be powerful while sentiment remains positive, but the downside can become sharper if earnings disappoint, AI spending expectations weaken, or macro conditions shift against growth stocks. Crowded positions can unwind quickly because funds often manage risk by cutting exposure at the same time. That means Nvidia, Broadcom, Meta, Amazon, and other AI-linked leaders are not just company-specific stories anymore; they are also market-structure stories tied to hedge fund positioning, leverage, and momentum.

For global markets, the Hazeltree report reinforces a broader theme: AI and semiconductors remain the centre of institutional equity positioning. Hedge funds are still rewarding companies they believe have durable growth, strong balance sheets, and exposure to the AI infrastructure cycle. But the trade is becoming more mature and more selective. The next phase may depend less on broad enthusiasm for “AI stocks” and more on whether individual companies can prove that AI-related spending translates into real revenue, margins, and cash flow.