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Hedge funds maintained their conviction in technology stocks during May despite persistent inflation, rising energy prices and escalating tensions in the Middle East, according to the latest Hazeltree Crowding Report. Global equities remained resilient throughout the month, with both the S&P 500 and Nasdaq Composite ending May close to record highs as investors continued to embrace growth despite macroeconomic headwinds.
Drawing on anonymised positioning data from more than 600 global hedge funds covering around 16,000 securities, the report found that Amazon, Nvidia and Meta remained the three most crowded long positions in North America. NatWest, ASML and Rolls-Royce continued to dominate long positioning across EMEA, while Taiwan Semiconductor, Sony and Kioxia were the most crowded longs in Asia-Pacific.
Hedge funds rotate within AI leaders
Within the Magnificent Seven, hedge funds became increasingly constructive on Alphabet and Apple, with both companies attracting a notable increase in long holders during May following strong quarterly earnings and robust cloud and services growth. At the same time, Meta experienced a decline in long positioning while short interest increased after the company raised its 2026 capital expenditure guidance, fuelling concerns over the near-term cost of expanding AI infrastructure.
Tesla remained the least favoured stock in the group, continuing to exhibit the weakest long-to-short positioning ratio among the Magnificent Seven. Amazon and Meta also saw higher short participation, while Microsoft and Apple experienced a reduction in bearish positioning.
Semiconductor sentiment improves
Hazeltree also reported a modest improvement in hedge fund sentiment towards semiconductor stocks. The proportion of the 30 largest US-listed semiconductor companies exhibiting net long positioning increased from 57% in April to 60% in May.
Texas Instruments recorded one of the biggest shifts, moving from net short to net long positioning during the month. Nvidia retained its position as the sector’s most crowded long trade, followed by Broadcom and Applied Materials, while ON Semiconductor remained the industry’s most crowded short.
The report’s spotlight focused on NXP Semiconductors, where hedge fund sentiment strengthened markedly. The company’s long-to-short fund ratio almost doubled from approximately 2:1 to 4:1 during May as long participation rose by more than 17%, supported by strong earnings, upbeat guidance and growing exposure to AI-driven data centre power management and industrial edge computing markets.