Hedge Funds' Exposure To Big Tech Hits Record High As Nvidia's Soaring Stock Drives Rally

In the wake of NVIDIACorp‘s NVDA remarkable earnings, hedge funds’ exposure to the top U.S. technology companies has reached an all-time high.

What Happened: The “Magnificent Seven” companies, which include Nvidia, Apple Inc AAPL, Amazon.com Inc AMZN, Meta Platforms Inc. META, Alphabet Inc GOOG GOOGL, Tesla Inc TSLA, and Microsoft Corp MSFT, now represent approximately 20.7% of hedge funds’ total net exposure to U.S. single stocks, as per a report by Goldman Sachs Group prime brokerage, reported Bloomberg on Wednesday.

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The index monitoring these tech giants has surged following Nvidia’s impressive quarterly earnings, further fueling the excitement surrounding artificial intelligence. Nvidia’s market capitalization has grown by about $470 billion since it released its results last week.

Why It Matters: The surge in hedge fund exposure to the “Magnificent Seven” comes on the heels of a series of significant developments. On Tuesday, analysts highlighted Nvidia and Arm Holdings ARM as top picks for long-term growth, emphasizing their potential in the evolving tech landscape.

Furthermore, a Wall Street guru recently hailed Nvidia as the standout leader among the “Magnificent Seven,” dubbing it the “Magnificent One” due to its market dominance and growth prospects.

However, the soaring stock price of Nvidia has also prompted analysts to advise a diversified portfolio approach. Experts suggested that while Nvidia’s dominant market share position is impressive, it could face challenges, urging investors to consider a broader range of tech stocks for balanced growth.

Additionally, geopolitical factors are at play. On Monday, reports emerged that China is setting up its largest semiconductor fund to nurture advanced chipmaking, potentially impacting Nvidia and other U.S. tech giants’ market presence in Asia.

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Image Via Pixabay

This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote