Hedge funds upped their purchases of technology stocks at the fastest pace seen in more than a year last week, driven by an increase in both long positions and short covering, according to a report by Bloomberg.

The report cites data from the prime brokerage division at Goldman Sachs in revealing that hedge funds were net buyers of the sector for a fourth straight week despite weakness in the S&P 500 Information Technology Index, which has been sliding for most of April amid concerns that the Federal Reserve will keep interest rates higher for longer.

The index rallied by 5.1% last week after a four-week losing streak, as investor confidence in the tech sector increased on the back of upbeat earnings from Google parent Alphabet and Microsoft.

Alphabet's market value surpassed $2tn as it reassured investors about its prospects with AI, while Microsoft’s stock also gained after the firm showed progress on AI in its quarterly results.

Semiconductors and semiconductor equipment companies were the most purchased tech stocks, although nearly all tech sub-sectors saw inflows.