Some of Wall Street’s largest hedge funds reduced their exposure to high-flying “Magnificent Seven” stocks during the third quarter, according to newly released regulatory filings, while adding positions in application software, e-commerce, and payments companies.
The group of tech giants — including Nvidia, Amazon, Alphabet, and Meta — has driven much of the market’s gains over the past year, but several funds appear to be rebalancing their portfolios after significant run-ups in valuations.
Notably, Bridgewater Associates cut its stake in Nvidia by nearly two-thirds, signaling caution on the chipmaker despite its strong performance. Tiger Global and Lone Pine Capital also trimmed their positions in Meta, while Discovery Capital initiated new holdings in Alphabet along with investments in Cleveland-Cliffs and health insurers, highlighting a shift toward more diversified sectors.
The filings, submitted to the U.S. Securities and Exchange Commission, reflect a broader trend of reduced concentration in mega-cap technology companies. Analysts say these moves likely stem from concerns over valuation risk and the desire to rotate into areas with perceived growth potential outside of the largest tech names.
The hedge funds’ reallocation underscores the ongoing market evolution, as investors balance the dominance of the Magnificent Seven — which also includes Apple, Microsoft, and Tesla — with emerging opportunities in mid-cap software, online retail, and fintech payments.
Despite the pullbacks, the Magnificent Seven continue to account for a significant portion of overall market capitalization, illustrating their central role in many hedge fund strategies. Additional details on hedge fund holdings are expected as the SEC processes remaining third-quarter 13F filings.