Hedge funds maintained strong conviction in AI-related investments during the first half of 2026 despite heightened geopolitical tensions and inflation concerns, with positioning becoming increasingly concentrated in semiconductor and AI infrastructure stocks, according to new data from Hazeltree.
The firm’s H1 2026 Crowding Report, which analyses anonymised positioning data from more than 600 global hedge funds across approximately 16,000 securities, found that managers largely looked through volatility caused by the Middle East conflict and continued to increase exposure to technology stocks linked to the AI investment cycle.
While equity markets experienced sharp swings during the period, they recovered quickly to reach new highs, reflecting investors’ confidence in the long-term growth outlook for AI-related businesses.
The report shows hedge funds retained significant long exposure to the so-called Magnificent Seven technology stocks, with Alphabet, Apple and Meta attracting stronger long interest over the six months to June. However, managers became more selective within the group, with Amazon seeing weaker long positioning alongside increased short interest. Microsoft and Nvidia also experienced a rise in short sellers, while short interest in Apple and Meta eased.
Hazeltree said the divergence suggests hedge funds are becoming increasingly discriminating between individual AI beneficiaries rather than treating the technology sector as a single thematic trade.
Semiconductor stocks remained one of the industry’s highest-conviction areas throughout the period. Tracking constituents of the PHLX Semiconductor Sector Index, Hazeltree found bullish positioning increased steadily, with the proportion of companies attracting net long exposure rising from 53% in February to 70% by June.
Texas Instruments and NXP Semiconductors were among the biggest shifts in sentiment, both moving from net short to net long positioning during May.
Tim Smith, Managing Director of Data Insights at Hazeltree, said hedge funds demonstrated resilience during what he described as an extraordinary first half for markets, maintaining a preference for equities despite elevated macroeconomic uncertainty.
He noted that although long exposure across semiconductor companies increased broadly, the rise in short interest in Nvidia highlighted a more selective approach to AI investments rather than indiscriminate buying.
Texas Instruments recorded one of the most significant changes in positioning during the review period. According to Hazeltree, the ratio of hedge funds holding long positions versus short positions increased from 0.6 at the beginning of January to 2.2 by early June, coinciding with a 68% rise in the company’s share price over the first six months of the year.
Regionally, North American hedge funds increased long exposure to companies including Applied Materials, Lam Research, Mastercard and Alphabet, while Oracle and Nebius Group saw notable increases in short positioning.
In Europe, hedge funds added to long positions in stocks such as NatWest, AIB Group, ABB, Centrica and AXA, while CVC Capital Partners and Elia Group attracted greater short interest.
Across Asia-Pacific, Sony recorded stronger long positioning, whereas Toyota, Xiaomi, Panasonic and Nippon Steel were among the companies that experienced increased short interest.
The Hazeltree report is based on aggregated securities finance data collected from the firm’s proprietary platform, which supports more than 600 alternative investment managers overseeing in excess of $4tn in assets. The study measures crowding by comparing the proportion of hedge funds holding long or short positions in individual securities relative to their regional and market capitalisation peer groups.
