Hedge funds bought technology stocks last week at the fastest pace in nearly three months, driven by renewed demand for companies exposed to artificial intelligence, according to a Goldman Sachs note.
The buying was broad-based, with technology shares purchased in every major region except Europe.
The largest inflows in dollar terms were recorded in North America and emerging markets in Asia, the note said.
Goldman said the flows reflected both fresh long positions and short-covering, as funds increased exposure to companies seen as direct beneficiaries of the AI boom.
Semiconductor manufacturers and software companies attracted the strongest demand, while IT services and communications equipment names were sold.
AI trade drives fresh positioning
The move marks one of the clearest signs that hedge funds are rebuilding conviction in the technology trade after a period of volatility across global markets.
According to Goldman, net long exposure to the global information technology sector saw its biggest increase in more than five years.
Hedge fund positions in global technology stocks are now close to the highest levels since 2016, when Goldman Sachs Prime Brokerage began tracking the trades.
The note said the buying was concentrated in areas most closely linked to AI infrastructure and adoption.
Chipmakers remained a major focus, given their central role in supplying processors and components used in data centres and AI model development.
Software companies also saw strong demand, as investors continued to look for businesses that could benefit from wider corporate adoption of AI tools.
The renewed buying suggests hedge funds are increasingly willing to add risk in parts of the market where earnings growth is viewed as more resilient.
It also shows that AI remains a dominant theme for professional investors, even as broader macroeconomic and geopolitical risks weigh on sentiment.
North America leads inflows
North America accounted for the largest technology buying flows in dollar terms, Goldman said.
That reflects the region’s heavy concentration of large-cap technology and semiconductor companies, many of which have become central to the AI investment story.
Emerging markets in Asia also saw significant inflows, helped by demand for companies connected to the semiconductor supply chain and AI infrastructure build-out.
Europe was the only region where hedge funds did not buy technology stocks during the week, according to the note.
The underperformance may reflect the region’s smaller exposure to global AI leaders and weaker investor appetite for European technology names.
Goldman said semiconductor-related and software companies were bought, while IT services and communications equipment companies were sold.
That split suggests investors are becoming more selective within the sector, favouring companies with clearer links to AI demand.
Tech exposure near record levels
The increase in hedge fund exposure comes as technology shares continue to dominate global equity market performance.
Goldman said hedge fund overweights in information technology versus the MSCI World Index are now at their highest level in more than five years and close to record levels.
“Tech is a big theme for us and for clients,” the note said. “It’s a big overweight for us, and it’s a big overweight for clients.”
The note added that the information technology overweight was the largest in more than five years and near a record since Goldman began tracking the data in 2016.
The positioning indicates that hedge funds are not only chasing short-term momentum but also treating AI-linked technology as a core part of their portfolios.
Geopolitical risks fail to derail chip demand
The note also pointed to the impact of the Iran war on the global economy, saying it had created pressure across several sectors.
However, chip manufacturers have so far avoided the worst effects, Goldman said.
The resilience of semiconductor companies appears to have reinforced investor confidence in the sector, particularly as demand linked to AI infrastructure remains strong.
Still, the heavy concentration of hedge fund positioning in technology could leave the sector exposed if sentiment turns.
With exposure near record levels, any disappointment in earnings, AI spending plans or macroeconomic conditions could trigger sharp reversals.
For now, however, Goldman’s data suggest hedge funds are continuing to back the AI trade, with semiconductor and software stocks at the centre of the latest wave of buying.
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