Hedge Funds Refine AI Bets as Monetization Replaces Spending Focus
Global hedge funds adjusted their artificial intelligence positions in July as investors shifted their attention from infrastructure spending toward evidence that companies can convert AI investments into revenue and earnings.
Managers made measured portfolio changes instead of abandoning the AI trade, according to Hazeltree’s July Data Insights Crowding Report. The rotation coincided with a 20% decline in the PHLX Semiconductor Sector Index, its largest monthly drop since 2008.
Among the Magnificent Seven companies, more funds established long positions in Tesla and Amazon during July. Apple, Meta Platforms and Nvidia experienced meaningful declines in long holders and increases in short participation. Microsoft and Tesla recorded fewer short holders.
“Last month, we observed global hedge funds navigating the market rotation with measured adjustments rather than broad de-risking,” said Tim Smith, managing director of Data Insights at Hazeltree.
Semiconductor positioning remained broadly constructive despite the selloff. Seventy percent of the 30 companies in the PHLX semiconductor index had net-long positioning, unchanged from June.
Intel shifted from a short bias to a long bias as its net-long exposure moved above 50%. Marvell Technology moved in the opposite direction, becoming short-biased.
Applied Materials was the most crowded semiconductor long, followed by Lam Research and Nvidia. ON Semiconductor remained the most crowded short, followed by Microchip Technology and Intel.
Short positioning also increased in AI infrastructure companies Super Micro Computer, CoreWeave and Nebius Group. All three ranked among Hazeltree clients’ 10 most-shorted stocks in July.
SpaceX’s long-to-short fund-count ratio fell to 0.55 from 2.8 in June as its shares declined 31% during July, the report said.
Data Insights is an institutional hedge fund market intelligence platform and a division of Hazeltree. The report is an analysis of anonymized securities-finance data covering approximately 16,000 securities and more than 700 global funds. Its crowding score measures how many funds hold long or short positions in a security relative to peers in the same region and market-cap group.
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