Hedge funds increased their long exposure to several Magnificent Seven stocks in September, led by Alphabet, while short positioning rose in Meta and Tesla, according to the latest Crowding Report from Hazeltree's Data Insights division.

The shifts came amid rising bond yields and inflation concerns linked to higher energy prices, with equity market gains concentrated in a narrow group of AI-related mega-cap technology stocks.

Alphabet recorded a moderate increase in the number of funds holding long positions, while Meta, Microsoft, Nvidia and Amazon saw smaller gains. Apple and Tesla registered declines.

On the short side, Meta and Tesla saw notable increases in fund participation, while Microsoft recorded a moderate rise. Short positioning declined across Nvidia, Amazon, Alphabet and Apple.

Alphabet's long-to-short fund count ratio recovered above 1.0x after falling below that level in August, leaving Apple and Tesla as the only Magnificent Seven stocks with more short than long holders. Tesla's ratio dropped to 0.54x, its lowest level of 2026.

Positioning across semiconductor stocks also turned more bullish. The proportion of constituents in the PHLX Semiconductor Sector Index exhibiting net long positioning increased to 76.7%, from 73.3% in August.

Broadcom recorded one of the largest shifts, moving from short-biased to long-biased positioning as net long exposure increased from 34.1% to 54.1%. Its long-to-short fund count ratio climbed from 1.79x to 2.53x.

Applied Materials remained the most crowded semiconductor long position, followed by Nvidia and Broadcom. Teradyne was the most crowded short, ahead of ON Semiconductor and Advanced Micro Devices.

“While market gains in September were concentrated in AI-linked mega-cap technology stocks, rising interest rates and inflation concerns both contributed to market volatility,” said Tim Smith, Managing Director of Data Insights at Hazeltree.

Smith added that hedge funds had used weakness in Broadcom's share price to rebuild long exposure during the month.

The report analyses anonymised positioning data covering approximately 16,000 securities and more than 700 global hedge funds across the Americas, EMEA and APAC.