Hedge funds increased bearish positioning across major US technology stocks in October as concerns over artificial intelligence valuations and infrastructure financing triggered a sharp rotation away from the sector, according to research from Data Insights.

The firm's October 2026 Crowding Report found that the number of hedge funds holding short positions increased across Amazon, Apple, Nvidia and Meta, while Tesla was the only Magnificent Seven stock to experience a reduction in short holders. Apple's long-to-short fund count ratio fell to 0.65, its lowest level this year, while Meta, Amazon and Microsoft also recorded annual lows.

Sentiment towards semiconductor stocks deteriorated, with the proportion of companies in the PHLX Semiconductor Index exhibiting net long positioning falling to 70%. Advanced Micro Devices shifted from a long bias to a short bias, with its long-to-short fund count ratio declining from 1.18 to 0.94 and net long exposure falling from 77.9% to 44.4%. Nvidia remained the most crowded long position in the sector, followed by Broadcom and Applied Materials.

AI infrastructure provider CoreWeave also came under pressure, with its shares declining approximately 37% in October as concerns over credit risks intensified. Its long-to-short fund count ratio fell from 0.60 to 0.53, while net long exposure declined to 55.9%, compared with around 80% earlier in the year. The company's 2032 bonds yielded close to 15%, highlighting growing investor concerns over AI infrastructure financing.

Beyond technology, hedge funds increased long positioning in companies including Rolls-Royce, Balfour Beatty and Johnson Matthey in Europe, while short interest rose in Kering, BT Group and Capgemini. In Asia Pacific, managers increased bullish positioning in Renesas Electronics while adding bearish exposure to Toyota, Ibiden and several other Japanese companies.

The report, based on anonymised positioning data covering approximately 16,000 securities across more than 700 hedge funds, highlights a widening divergence between technology and other equity sectors. While the Nasdaq Composite declined approximately 5% in October and the semiconductor index fell around 16%, the equal-weighted S&P 500 gained approximately 5%, reflecting stronger performance outside the largest technology stocks.