Hedge Funds Pivot to Big Tech Amid AI Surge, Shifting Away from Lagging Sectors

Wall Street's heavyweight hedge funds—Bridgewater Associates, Tiger Global Management, and Discovery Capital—ramped up their exposure to Big Tech during the second quarter, capitalizing on the explosive growth of artificial intelligence. The MOVE marks a stark reversal from earlier this year, when inflation fears and AI bubble concerns triggered sell-offs in tech giants.

The S&P 500's 10% year-to-date gain has been disproportionately driven by megacap tech stocks, which now account for nearly a third of the index's total market capitalization. Hedge funds simultaneously reduced positions in underperforming sectors like aerospace, defense, and retail, signaling a broader return to momentum investing strategies.

UnitedHealth Group emerged as an outlier bet for funds like Lone Pine and Discovery, despite its 46% stock plunge this year. Regulatory scrutiny, rising costs, and executive turmoil have weighed on the healthcare giant, yet prominent investors including Berkshire Hathaway and Scion Asset Management initiated or expanded positions.