Hedge Funds Boost AI Stock Exposure in Early 2026

Hedge funds increased their exposure to artificial intelligence-related stocks in the first quarter of 2026, according to a Goldman Sachs report tracking positioning across the industry. The shift showed a rotation within technology holdings, with funds moving away from software and toward semiconductor names. The report also flagged more concentrated positioning as AI-linked stocks gained popularity among large managers.

The analysis covered more than 1,000 U.S.-registered hedge funds with about $4.6 trillion in gross long and short holdings. According to the report, hedge funds raised their net exposure to the Information Technology sector by 853 basis points during the quarter, the largest quarterly increase on record for the sector. Funds reduced exposure to most other sectors while also increasing positions in Communication Services, the report said.

The report described the repositioning as part of a broader push into AI infrastructure. It also noted that crowding metrics increased as more funds favored the same set of AI-linked trades.

Rotation within tech: semiconductors up, software down

Within long portfolios, hedge funds held a 90th percentile tilt toward the Momentum factor, the report said. They also reached a record 10% portfolio weight in Semiconductors, while software holdings fell to their lowest weight since 2019.

Among the quarter’s “Rising Stars,” defined in the report as stocks with the largest increases in hedge fund popularity, roughly half were tied to AI. The report listed SNDK, LRCX, and AMAT as examples.

VIP list additions and growing crowding risks

The report said seven of the 12 new additions to its “Hedge Fund VIP list,” which it described as the most popular long positions, were AI infrastructure companies. With more funds clustering in similar names, the report said hedge fund crowding measures moved higher.

Investors will be watching whether the trade remains durable as funds enter the next quarter with more concentrated exposure to a narrow set of technology and AI-linked positions.