(HedgeCo.Net) Hedge funds are increasingly shifting their strategic bets — reducing exposure to traditional energy stocks while ramping up allocations to big technology and artificial-intelligence (AI) sectors. Bloomberg+2Investing.com+2
According to a Bloomberg feature, many hedge funds have “flipped” their energy views: after years of dominance in long oil-and-gas bets, funds are now positioning for structural change, including clean-tech, AI infrastructure, and industrial innovations tied to energy transition. Bloomberg Concurrently, a Reuters piece noted that in Q2 2025, hedge funds boosted their exposure to large tech names during the AI boom, while trimming laggard sectors such as aerospace, defence and retail. Investing.com
One visible example: funds pushing into industrial stocks that benefit from infrastructure, AI data-centre build-outs and electrification — with industrials seeing net hedge-fund purchases at a five-year high. AInvest
Why the pivot? A few drivers:
- The AI wave has reinforced the earnings-growth narrative for large tech names, making them more attractive for concentrated bets.
- Energy markets are dealing with regulatory risk, supply shocks, and transition headwinds — prompting some funds to hedge or short rather than stick purely long.
- In a world of higher inflation, rising rates and elevated volatility, hedge funds see better asymmetric risk-reward in tech/industrial themes versus commodity-heavy exposures.
Implications for investors:
- The hedge fund “alpha pool” is shifting — investors looking for hedge-fund exposure may now find more bets in tech/industrial than classic energy plays.
- Managers who successfully pivot will differentiate themselves; others that stick with stale allocations may lag.
- Portfolio construction may need to adapt: exposures to tech/AI through hedge funds may increase overlapping risk with long tech equity positions, so understanding cross-correlation is key.
In summary: hedge funds are repositioning with the market regime change. Tech + AI are the new focus, energy is getting a rethink, and industrial/infrastructure themes are gaining ground.