Wall Street Remains Cautious! Latest 13F Holdings Report Summary: Divergent Adjustments in Tech Giants and AI Sector, Tug-of-War Between Bulls and Bears Continues

According to a report by Zhitong Finance APP, quarterly 13F filings disclosed by the U.S. Securities and Exchange Commission (SEC) show that in the second quarter of this year, institutional investors slightly reduced their holdings in key sectors such as semiconductors, artificial intelligence (AI) infrastructure, and major technology stocks, with no significant signs of large, one-sided bets overall.

An analysis of 6,371 13F filings submitted by pension funds, hedge funds, wealth management institutions, and other institutional investors found that the number of institutions increasing and reducing positions was not significantly different, although in many cases, there were slightly more sellers than buyers.

Among the so-called "Magnificent Seven" group of mega-cap tech stocks (including Microsoft (MSFT.US), Meta Platforms (META.US), etc.), about 44% of reporting institutions reduced their positions, while 42% either initiated or increased their holdings. The remaining institutions did not disclose any changes in holdings. These tech giants have been a major driving force behind the current bull market.

The filings cover quarterly holdings as of June 30th, and the data analyzed is based on reports available as of last Friday afternoon (according to the SEC website).

The holding filings do not disclose the specific logic behind portfolio adjustments. However, some market participants point out that these data may reflect that many institutions already have large positions in these sectors, rather than their judgment on the fundamentals of related companies—which also helps explain certain recent shifts in market momentum.

Shaia Hosseinzadeh, founder of hedge fund OnyxPoint Global Management, stated: "When the power of buyers and sellers is so close, we believe it signals a lack of market consensus. No one questions the scale of (AI) spending." However, he added that there is disagreement over which companies will ultimately benefit, bringing about uncertainty.

For many funds holding large amounts of these companies for the long term, risk factors have also become an important consideration.

Interactive Brokers market strategist Steve Sosnick pointed out: "What you might be seeing is that some big institutions, based on their own risk parameters or investment policies, have reached or are nearing their position limits." He added: "This also explains why some companies with positive earnings have seen their stock prices weaken after earnings reports—those large holders who typically buy on good news are no longer able to add further to their positions."

13F data also shows that as of the end of the second quarter, institutional investors remained overall net-long in the semiconductor sector. Among funds that filed, 48% were net buyers, while only 34.5% were net sellers.

A similar narrow gap emerged among a group of 20 major software companies including Adobe (ADBE.US) and Datadog (DDOG.US): 28.2% of institutional investors were net sellers, and 26.3% were net buyers.

Tiger Global Reduces Holdings in the "Magnificent Seven"

At least one high-profile hedge fund—Tiger Global Management—disclosed that it reduced its holdings in several “Magnificent Seven” companies such as Microsoft, Nvidia (NVDA.US), and Meta during the second quarter, and cut its stake in Alphabet (GOOGL.US) by 45.4% to 5.8 million shares. The fund also reduced its holdings in TSMC (TSM.US) (which SoftBank Group also did), but increased its stake in Intel (INTC.US).

This move may have cost some hedge funds dearly in July—when unwinding tech-related trades severely dragged down returns. A report by JPMorgan released earlier this month noted that heavy crowding in tech stocks made it especially difficult for speculators such as hedge funds to lock in previous profits when trying to exit trades.

In the second quarter, investors overall showed a tendency to increase holdings in AI-themed stocks. Among all institutions that submitted 13F filings, 36% disclosed a net purchase of AI concept stocks such as CoreWeave (CRWV.US), Arista Networks (ANET.US), and Broadcom (AVGO.US).

Bruno Schneller, managing partner of multi-family office Erlen Capital Management, said that in the second quarter, various AI-related stocks—from memory chips to data centers—“have evolved from growth stories based on fundamentals into high-leverage momentum trades.” He added that the declines in many related stocks in July "were more a result of typical crowded trade unwinding exacerbated by leverage and insufficient risk controls, rather than a market rejection of the long-term AI narrative."

Despite rising crude oil prices in the second quarter, institutional investors as a whole showed little interest in the energy sector, with 40.3% of reporting institutions being net sellers in 12 major energy companies, while only 28% were net buyers.

OnyxPoint—a hedge fund investing in metals, mining, and energy companies in the AI supply chain—meanwhile increased exposure to some energy assets in the second quarter. The fund opened new positions in BP (BP.US), Devon Energy (DVN.US), and geothermal supplier Fervo Energy (FRVO.US), and also built a position in data center company Keel Infrastructure (KEEL.US).

Overall, institutional investors are taking a wait-and-see attitude towards the data center sector, with the proportion of net buyers and net sellers nearly equal, accounting for 24.3% each of reporting institutions.