Hedge funds reversed selling trend and bought tech stocks after weeks of declines
Tech stocks fell as investors questioned AI returns justification for valuations
Software stocks saw renewed buying after being sold at historically high levels
Hedge fund leverage increased to near one-year highs while financial stocks saw highest net selling
📖 Full Retelling
Hedge funds increased their positions in technology stocks last week after weeks of selling, according to notes from JPMorgan and Goldman Sachs seen by Reuters in London on February 24, 2026, as investors reassess valuations following declines in tech shares that had been hit by concerns about AI returns. The world's most valuable technology companies have experienced sharp declines this year after years of exceptional gains, with investors questioning whether heavy spending on artificial intelligence will generate sufficient returns to justify the lofty valuations. JPMorgan reported in a client note that while positioning remains stretched between semiconductor and software stocks globally, the recent selling trend appeared to slow or reverse last week. Software stocks in particular saw renewed buying interest after being sold down by historically large amounts in the previous period, though the bank did not specify exact timeframes for comparison. Goldman Sachs separately noted that hedge fund leverage has increased from the week ending February 14 and is approaching its highest level in a year, while net sales orders in global equities reached their highest point since U.S. President Donald Trump announced a series of import tariffs last April. The investment bank reported that financial stocks experienced the highest net selling across sectors, while energy, healthcare, and consumer staples saw the greatest net buying activity.
🏷️ Themes
Market Rotation, Technology Sector, Hedge Fund Activity
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A hedge fund is a pooled investment fund that holds liquid assets and that makes use of complex trading and risk management techniques to aim to improve investment performance and insulate returns from market risk. Among these portfolio techniques are short selling and the use of leverage and deriv...
This shift in hedge fund activity signals a potential change in market sentiment toward technology stocks after a period of heavy selling. It indicates that large investors may be regaining confidence in the sector's ability to deliver returns from AI investments despite recent volatility. The movement is closely watched as it can influence broader market trends and valuations.
Context & Background
Tech stocks faced sharp declines in early 2026 after years of strong gains.
Investors have been questioning whether heavy AI spending will justify high valuations.
Hedge fund leverage is nearing its highest level in a year.
Software stocks were previously sold at historic levels before recent buying.
Financial stocks saw the highest net sales while energy and healthcare saw net buying.
What Happens Next
Market participants will monitor whether this buying trend continues and if it stabilizes tech stock valuations. Further reports from major banks will be scrutinized for signs of sustained hedge fund interest or a return to selling pressure.
Frequently Asked Questions
Which tech stocks did hedge funds buy?
Hedge funds bought the biggest tech stocks and those vulnerable to AI advances, according to JPMorgan.
What was the trend in hedge fund leverage?
Hedge fund leverage increased and is nearing its highest level in a year, per Goldman Sachs.
Which sectors saw the most net buying?
Energy, health care, and staples saw the greatest net buying, while financial stocks had the highest net sales.
Original Source
try{ var _=i o; . if(!_||_&&typeof _==="object"&&_.expiry Asia stocks rise as China reopens on a strong note; Hong Kong hit by tech losses Wall Street slides on Trump tariff turmoil, AI disruption research report Dystopian AI report sinks payment and software stocks Gold slips lower; snapping four-day winning streak (South Africa Philippines Nigeria) Hedge funds creep back into tech stocks after weeks of selling By Reuters Economy Published 02/24/2026, 04:40 AM Updated 02/24/2026, 04:42 AM Hedge funds creep back into tech stocks after weeks of selling 0 By Nell Mackenzie LONDON, Feb 24 - Hedge funds last week bought the biggest tech stocks as well as those considered vulnerable to advances in artificial intelligence, said a note to clients from JPMorgan seen by Reuters on Tuesday. The world’s most valuable technology stocks have suffered sharp declines this year after years of outsized gains, as investors question whether heavy spending on AI will generate sufficient returns to justify the lofty valuations. "While positioning remains very stretched between Semis and Software (globally, in the U.S., and in Europe), the rotation seemed to slow or reverse a bit," said the note to clients. Software stocks saw some buying after being sold down by historic amounts the week before, the bank said, without putting a timeframe on the comparison. Hedge fund leverage increased from the week ending February 14 and is nearing its highest level in a year, said a separate note from Goldman Sachs seen by Reuters on Tuesday. It said net sales orders in global equities had hit their highest level since U.S. President Donald Trump announced a barrage of import tariffs last April. Financial stocks were the sector with the highest net sales, while energy, health care and staples saw the greatest net buying, said Goldman Sachs. It did not break down the financial stocks into sub-categories. (Nell Mackenzie; Editing by Dhara Ranasinghe and Kevin Liffey)
