Global Markets | Hedge funds pour hopes into tech even as AI jitters rattle, says Hazeltree

Global hedge funds' most crowded long trades in February centered on technology stocks, data from securities lending provider Hazeltree showed on Wednesday.

The ​S&P info tech index, which tracks some of the biggest global technology firms, has fallen around 4% so far this year. The broader S&P index is down ‌almost 1%.

Here are ⁠some ⁠details about hedge fund positioning in tech:


* Global tech companies such as Tencent, Nvidia and Microsoft attracted high amounts of hedge fund buying in February, said the Hazeltree report.

* Hazeltree's report is based on data from 600 asset managers tracking 16,000 global stocks.

* Hedge funds have continued to buy technology ​stocks through the beginning of this month to ⁠March 6, ‌separate data from a Goldman Sachs client note also ​showed.

* U.S. ​tech was the most bought region in the ⁠sector, said Goldman's note.

* Hedge fund buying in software companies ​mainly comprised of short covering, when traders must exit ​losing bets that wagered the asset prices would fall, said Goldman.

* Hedge funds held crowded short tech stocks in February including in payments firm, Wise, file storage company Dropbox and AI scaler, Oracle, showed the Hazeltree data. The firms did not immediately respond to requests for contact.

* ‌Some warn that the AI boom has entered a "more dangerous phase", marked by exponentially rising investments in physical infrastructure ​and growing ​reliance on outside capital, according ⁠to an analysis by Bridgewater Associates last month.

* "AI investment continues to surprise to the upside," said a JPMorgan client note on March 6, seen by Reuters on Wednesday. It pointed to projections of investment growth in the sector.

* The world's largest tech companies are tapping debt markets, as they seek to bolster their AI infrastructure, marking a shift for Silicon Valley firms that typically relied on cash to fund their investments.