Goldman: Hedge Funds Are Betting Big on Big AI Stocks
The smart money does not think there’s an AI bubble.
Stockpicking hedge funds are “all in” on AI trade, according to Goldman Sachs, which examined portfolio holdings of more than 1,000 managers running more than $4 trillion as of the end of the first quarter. Funds had the largest-ever shift into information technology stocks last quarter, with the average stockpicker now allocating 10% of their portfolio to semiconductor companies alone, the report said.
It’s been a winning trade so far in 2026: Goldman’s basket of stocks that are most popular in hedge funds’ portfolios outperformed the S&P 500 through May 21, 13% to 9%. Amazon, Nvidia, Alphabet, Microsoft, and Meta are the five biggest holdings in that basket, and AI darlings like SanDisk, Lam Research, and Applied Materials surged in popularity among the hedge fund crowd last quarter.
“It suggests that these funds are very good stockpickers,” said Ben Snider, Goldman’s chief US equity strategist and one of the report’s authors.
Funds have run away from companies that are either at risk because of AI or not connected to the theme overall. Software stocks’ portion of hedge funds’ portfolios is at its lowest level since 2019, at just 6%, the report states. Funds’ bets against companies in so-called “defensive” sectors — like healthcare, utilities, and consumer staples, which should have steady revenue streams regardless of the macroeconomic environment — are at or near record levels.
“Funds don’t appear to be all in on the equity market, just AI,” Snider said.
Snider told Business Insider that funds have shown “a degree of skepticism” about non-AI stocks, an interesting “juxtaposition” with their deep belief in AI stocks. The only non-tech sector that hedge funds added more exposure to in the first quarter was financials, with Wells Fargo being a popular portfolio addition.
The most valuable companies in the world still have room to grow, from hedge funds’ point of view, Snider said.
“They are focusing their capital and their time on these large tech companies,” he said.
