Hedge funds are currently holding their largest stakes in AI-hardware stocks — particularly semiconductor companies and chip-equipment firms — since Goldman Sachs began tracking these positions in 2016.
According to the note from Goldman Sachs seen by Reuters, fund buying has shifted away from mega-cap tech platforms (often referred to as the “Magnificent Seven”) and is now concentrated more in chip-making and related hardware sectors across the U.S. and Asia.
The shift reflects speculation that the next phase of the AI wave will demand large volumes of chip-hardware, data-centre infrastructure and regional manufacturing capacity. Meanwhile, companies without a clear link to AI-hardware appear to be lagging.

Key Highlights
• Hedge fund exposure to AI-hardware has reached its highest mark since 2016.
• The new focus is on semiconductor firms and chip-equipment makers rather than only large tech platforms.
• The shift began in September, according to Goldman Sachs.
• Asian tech companies (outside China) are driving part of the inflows in the hardware space.

Why This Matters
• It underscores the deepening fragmentation of the tech investment cycle — hardware infrastructure is now gaining precedence over software platforms in certain portfolios.
• For investors and companies, this trend could signal where the next wave of AI capital is being allocated, which may drive hardware supply-chain expansions.
• For emerging markets and hardware manufacturers in Asia, this could represent increased access to funding and global demand for AI-enabled infrastructure.
• From a strategic perspective, sustained inflows into AI-hardware may raise concerns about valuation excess, supply-chain bottlenecks and cyclical risk if demand expectations overshoot the actual growth.

Source
Reuters – Full Article