LONDON – Hedge funds continued to hold heavily crowded long positions in major U.S. tech stocks throughout 2025, according to a report published Wednesday by data and technology firm Hazeltree. Stocks at the center of these crowded trades included Alphabet (GOOGL.O), Microsoft (MSFT.O), and Meta (META.O), while short positions persisted in names such as IBM (IBM.N), MicroStrategy (MSTR.O), and Synopsys (SNPS.O).

A long position reflects a bet that a stock or asset will rise in value, whereas a short position anticipates a price decline. The report analyzed data from over 600 asset management firms covering 16,000 stocks globally, providing a comprehensive view of hedge fund positioning across regions and sectors.

U.S. Tech Dominates Crowded Long Trades

The report highlighted that long positions in the so-called “Magnificent Seven” U.S. tech stocks—Alphabet, Microsoft, and Meta—remained extremely crowded. Hedge fund managers displayed strong conviction in software and services companies poised to benefit from artificial intelligence (AI) and digital transformation trends.

On the short side, crowded positions persisted in IBM and MicroStrategy, with investors expressing caution about potential underperformance or structural risks. Synopsys, a chip design software provider, emerged as an increasingly crowded short, amid concerns over execution risk following its $35 billion acquisition of engineering design firm Ansys and revenue shortfalls reported in the third quarter.

Financial Sector Short Positions

Within the U.S. financial sector, Wells Fargo (WFC.N), JPMorgan Chase (JPM.N), and KeyCorp (KEY.N) showed the most crowded short positions, reflecting investor caution over banks’ exposure to regulatory risks, interest rate fluctuations, and potential credit-market pressures.

European and Asian Crowded Trades

In Europe, industrial stocks dominated both long and short crowded positions, reflecting investor exposure to sectors benefiting from increased defense and energy spending.

In Asia, hedge fund positions were concentrated in industrial and tech hardware stocks, emphasizing the region’s role as a manufacturing and supply-chain hub for global AI growth and semiconductor production. Crowded long positions in companies providing AI hardware or industrial automation solutions highlighted investor confidence in Asia’s strategic importance in the tech ecosystem.

Broader Implications

The Hazeltree report underscores that hedge funds are highly concentrated in specific sectors, with tech and industrial stocks being the most crowded globally. While crowded trades can amplify returns in bullish markets, they also carry heightened risk in volatile conditions, as rapid shifts in sentiment could trigger sharp reversals.

The persistence of heavily crowded positions in AI-linked tech stocks reflects long-term investor confidence in artificial intelligence trends, while the concentration of short bets in certain financial and industrial names signals caution in areas where execution risks or regulatory pressures are perceived to be high.