Hedge funds make record 10-year bets on tech sector - Goldman Sachs

The tech sector was the top choice of hedge funds last week, with managers buying up these stocks at the fastest pace in nearly three months and the volume of hedge fund bets on the tech sector hitting the highest on record - since 2016, according to a Goldman Sachs research note cited by Reuters.

Companies that could benefit from the development of AI - especially semiconductor and chip makers - have managed to avoid the negative effects of the war in the Middle East, which has already begun to affect the entire global economy, the agency notes.

Hedge funds last week actively bought shares of technology companies, closing their previous short positions (shorts) and at the same time opening "long" - in expectation of further market growth. This is reported by Goldman Sachs strategists.

As a result, the share of the tech sector in fund portfolios relative to technology stocks in the MSCI World Index - the main global market benchmark tracking the shares of the largest companies from 23 developed countries - reached its highest level in more than five years. And the volume of hedge fund bets on global IT stocks hit a new high, surpassing Goldman Sachs' all-time high of 2016.

According to analysts' data, managers bought shares of tech companies in all key regions of the world, except for Europe, and the leaders in terms of raised capital in dollar equivalent were North America and emerging markets of Asia.

Sector-wise, hedge funds favored semiconductor manufacturers and software developers, while selling off securities of IT service providers and telecom equipment.

The bulls regained control of Wall Street last week as the S&P 500 U.S. broad market index recorded its eighth consecutive week of gains on Ma. 25, the longest streak of weekly gains since December 2023.

The S&P 500 was supported by strong results of major technology companies (for example, Nvidia and Arm presented their quarterly results last week), among other things, after the war-induced fall of the index by almost 10% in March against the maximum it had reached in January. Investor sentiment also improved after US President Donald Trump announced that negotiations with Iran were moving to the final stage. Against this backdrop, global oil prices, which had previously held steady above $100 per barrel and fueled inflation in the U.S., showed a decline.

Weakening inflation risks allowed the S&P 500 to grow by 0.88% last week and close to the historical maximum of 7517.12 points, recorded on Ma 14. At the same time, the Dow Jones Industrial Average rose by 2.13% last week, ending the trading week at a new all-time high.

The current stock market boom is a continuation of a trend that began back in mid-spring. According to the report of analytical platform Hazeltree, in April hedge funds also focused on companies with strong fundamentals, favoring the technology and semiconductor sectors, noted Reuters. According to Hazeltree, last month the favorites of hedge funds among large U.S. companies were Meta and Amazon - the number of funds that opened long positions on them, then for the month increased by more than 5%. Nvidia retained its status as the main favorite in the semiconductor industry.

Before the start of trading on Ma. 26, futures on the S&P 500 are growing by 0.7%, on the Dow Jones - by 0.5%, on the technology Nasdaq 100 - adding more than 1%. Brent contracts for delivery in July are trading at $98 a barrel. Shares of Nvidia are up just over 1% on the premarket, Meta is up 0.15% and Amazon is up 0.65%.

This article was AI-translated and verified by a human editor