Investing.com - Major hedge funds on Wall Street such as 'Bridgewater Associates', 'Tiger Global Management', and 'Discovery Capital' expanded their exposure to shares of major tech companies during the second quarter, amid an exceptional boom in AI growth.

During the June quarter, hedge funds reduced their exposure to declining sectors such as defense and aerospace, as well as consumer and retail, as part of a broader shift back towards momentum-based investing.

This marks a significant shift from the beginning of the year when the bets of major fund managers on tech companies declined due to volatility fueled by tariffs in financial markets, alongside concerns about rising inflation and fears of a bubble in artificial intelligence, which triggered a sell-off of the 'seven giants' stocks.

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The major rebound in tech stocks

Since then, tech stocks have regained momentum strongly. The S&P 500 index has risen by 10% since the beginning of the year, supported primarily by major tech companies, which represent about one-third of the combined market value of the index's companies.

Away from technology, some hedge funds like 'Lone Pine' and 'Discovery' bet on 'UnitedHealth Group'. 'Berkshire Hathaway' and 'Scion Asset Management' under Michael Burry revealed similar bets on the insurance company, while 'Soros Fund Management' reinforced its existing position.

However, shares of 'UnitedHealth' have declined by 46% this year, facing rising costs and an investigation by the U.S. Department of Justice, along with being hit by a cyber attack and the shooting incident involving its former CEO Brian Thompson last December.

Quarterly disclosures reveal trends

The funds' positions were revealed in quarterly securities filings known as 13F. Although they reflect past data, these disclosures typically reveal what the funds owned on the last day of the quarter and are among the few means that allow hedge funds and institutional investors to disclose their positions.

Here are the details of changes in the holdings of prominent hedge funds:

'Bridgewater Associates'

'Bridgewater' added more shares of 'Nvidia' (Nvidia), 'Alphabet' (Alphabet), and 'Microsoft' (Microsoft) in the second quarter.

The total fund founded by 'Ray Dalio' more than doubled its bets on 'Nvidia'. By the end of June, it owned 7.23 million shares of the chipmaker, an increase of 154.5% compared to the end of March. 'Nvidia' was the fund's largest individual bet worth $1.14 billion.

Its holdings in 'Alphabet' and 'Microsoft' increased by 84.1% and 111.9%, respectively, reaching $987 million and $853 million.

'Discovery Capital'

The fund also added shares linked to artificial intelligence such as 'Broadcom', whose stake rose by 102.7% to 317.8 million shares valued at $317 million, and 'Palo Alto Networks' by 117% to 313.8 million shares valued at $314 million.

For its part, 'Discovery Capital', founded by 'Rob Citrone', doubled its stake in the telecom company 'America Movil' during the second quarter. By the end of June, the fund added 2.65 million additional shares, bringing the current value of its holdings in the company to about $95 million.

The 'Citron' fund achieved an exceptional return of 52% last year and increased its exposure to Latin America as part of a strategy aimed at diversifying investments away from the U.S. market.

During the same quarter, 'Discovery' boosted its holdings in major tech companies, more than doubling its stake in 'Meta Platforms', the owner of 'Facebook', and investing in the rising demand for artificial intelligence through a new stake in the cloud computing provider 'CoreWeave' backed by 'Nvidia'.

The fund also raised its stake in 'UnitedHealth' by 13%.

'Tiger Global Management'

13F disclosures showed that 'Tiger Global' added more shares of some 'magnificent seven' companies during the second quarter, including 'Amazon' (Amazon.com), 'Alphabet', 'Nvidia', 'Microsoft', and 'Meta'.

'Chase Coleman's' fund added about 4 million shares of 'Amazon', bringing its total stake by the end of June to about 10 million shares valued at $2.34 billion.

The fund also increased its bets on smaller AI companies, purchasing over 800,000 shares in 'Lam Research Corp', a chip manufacturing equipment provider, ending June with 5.26 million shares valued at $512 million.

'Coatue Management'

Significant changes in the portfolio of 'Coatue Management' under 'Philippe Laffont' also revealed its shift towards AI-related stocks. The fund announced new positions in 'Arm Holdings' and 'Oracle', with stakes valued at approximately $750 million and $843 million, respectively. Both companies have enhanced their AI-related business initiatives.

'Coatue' also increased its holdings in 'CoreWeave' backed by 'Nvidia', adding 3.39 million shares in the second quarter, bringing its stake in the company to $2.9 billion.

'Lone Pine Capital'

'Lone Pine Capital' took a new position in 'UnitedHealth Group', buying 1.69 million shares valued at approximately $528 million during the June quarter.