Hedge funds creep back into tech stocks after weeks of selling

• Software stocks saw buying after 'historic' selloff the previous week, though positioning remains 'very stretched' between semiconductor and software sectors globally
• Hedge fund leverage increased from the week ending February 14 and is nearing its highest level in a year, per Goldman Sachs
• Financial stocks saw the highest net sales, while energy, healthcare, and staples experienced the greatest net buying activity

Market Summary: Hedge Funds Return to Tech Stocks

Key Developments

Hedge funds resumed buying major technology stocks last week after an extended period of selling, according to a JPMorgan client note dated February 24, 2026. This marks a potential reversal in positioning within the sector, which has experienced sharp declines this year following years of outsized gains.

Sector Activity

Technology stocks saw renewed interest, particularly:

• Large-cap tech companies
• Stocks vulnerable to AI disruption
• Software stocks, which experienced buying after "historic" sell-offs the previous week

JPMorgan noted that while positioning between semiconductors and software remains "very stretched" globally (including U.S. and Europe), the recent rotation appeared to slow or reverse.

Broader Market Positioning

Goldman Sachs reported that hedge fund leverage increased from the week ending February 14, approaching its highest level in one year. Net sales orders in global equities reached their highest point since President Trump's tariff announcement in April 2025.

Sector breakdown:

• Highest net sales: Financial stocks
• Highest net buying: Energy, healthcare, and consumer staples

Market Context

The shift comes as investors reassess whether substantial AI investments can justify the elevated valuations that propelled tech stocks in recent years. The cautious return to technology suggests hedge funds may be identifying value opportunities following the sector's recent weakness, though positioning remains significantly skewed between semiconductor and software segments.