Hedge Funds are Turning to Artificial Intelligence Hardware

London - Investments by hedge funds in technology hardware related to artificial intelligence reached their highest level in October, according to data tracked by Goldman Sachs since 2016.

Goldman Sachs noted that purchases of semiconductor and related chip industry shares during this period indicate that investors hold optimism about emerging markets. Hedge funds are focusing their stock purchases on long positions, betting that these shares will rise.

Doug Peta, Vice President and Investment Strategist at BCA Research, stated in a research note published on Tuesday that companies benefiting from artificial intelligence profits are performing well, while those disconnected from this technology are lagging behind.

Among the sub-sectors of the S&P index, the best performers this year have been communications services, technology, and utilities, which have significantly outpaced the S&P 500 index.

However, interest from hedge funds in technology stocks has varied. Goldman Sachs reported that speculators have reduced their trades targeting the power companies behind the servers fueling artificial intelligence. Additionally, funds have shifted away from focusing on the largest technology companies, referred to as the Magnificent Seven.

Demand for semiconductors and related equipment began in September. Purchases by technology companies in Asia have increased overall inflows in emerging markets outside of China, and Goldman Sachs announced that this positioning has reached "fresh multi-year highs."