A Reuters analysis of quarterly 13F filings from 6,371 pension funds, hedge funds, wealth managers and other institutional investors reveals a cautious stance toward key market segments in the second quarter.
The filings, covering the quarter through June 30, show investors pulled back slightly from semiconductors, AI infrastructure and megacap technology companies, with few large bets placed in either direction.
Nearly 44% of filers trimmed their holdings in the Magnificent Seven group of megacap tech firms, including Microsoft (NASDAQ: MSFT) and Meta Platforms (NASDAQ: META), while 42% initiated or expanded their positions in the same group.
The narrow gap between buyers and sellers was interpreted by some market participants as a sign of saturated positioning rather than a fundamental shift in outlook toward these companies.
“When buys and sells are that closely matched, to us it signals the absence of consensus,” said Shaia Hosseinzadeh, founder of OnyxPoint Global Management, a hedge fund.
Hosseinzadeh added that while nobody disputes the scale of AI spending currently underway, disagreement remains over which companies will ultimately profit, creating meaningful uncertainty across institutional portfolios.
Steve Sosnick, market strategist at Interactive Brokers, offered a complementary explanation, suggesting that large firms may simply have reached the limits of how much exposure their risk parameters allow.
“That also would explain why some companies that have reported good earnings have still seen their stocks sell off afterwards,” Sosnick added, noting that major holders who would normally buy on positive news could not increase their positions further.
Tiger Global Management disclosed it cut holdings in several Magnificent Seven names, including Microsoft, Nvidia and Meta, and reduced its exposure to Alphabet by 45.4% to 5.8 million shares during the quarter.
Tiger Global also reduced its holdings in Taiwan Semiconductor, as did SoftBank Group, though the fund did boost its position in Intel during the same period.
The pullback from technology-oriented trades may have cost some hedge funds significantly in July, when an unwinding of crowded tech positions made it particularly difficult to exit trades profitably, according to a JPMorgan note seen by Reuters.
Institutional investors still leaned bullish on semiconductor names overall, with 48% of filers recorded as net buyers and only 34.5% as net sellers, suggesting selective rather than wholesale retreat from the sector.
A group of 20 major software companies, including Adobe and Datadog, showed a similarly tight spread, with 28.2% of institutional investors as net sellers and 26.3% as net buyers.
AI-themed stocks, including CoreWeave, Arista Networks and Broadcom, attracted net buying interest from 36% of all institutions that filed 13F documents, indicating continued appetite despite the broader caution.
Bruno Schneller, managing partner at multi-family office Erlen Capital Management, said AI-related stocks ranging from memory chips to data centers “moved from (being) a fundamental growth story into a highly leveraged momentum trade” during the second quarter.
The July selloff in many of these names, Schneller said, “was less a rejection of the long-term AI thesis and more a classic crowded-trade unwind amplified by leverage and inadequate risk controls.”
Despite rising crude oil prices during the second quarter, institutional investors showed limited enthusiasm for energy, with 40.3% reporting as net sellers of major energy firms against only 28% as net buyers.
OnyxPoint bucked that trend, establishing new positions in BP and Devon Energy, as well as geothermal energy provider Fervo Energy, while also initiating a stake in data center company Keel Infrastructure.
Overall, institutional sentiment toward data centers was almost precisely balanced, with 24.3% of filers recorded as net buyers and an equal 24.3% as net sellers, underscoring a broad wait-and-see posture across the sector.
