Hedge funds upped short AI bets in July, Hazeltree says

LONDON, Aug 12 (Reuters) - Hedge ‌funds upped short ​bets ​on AI-related stocks in July, according to a Wednesday report from data platform Hazeltree, part of a broad shift in ‌the month that saw chipmaker shares tumble around the world

Here ⁠are some details about hedge fund positioning in July:

• Hedge funds increased short positions — ‌bets that a price will ‌fall — in chipmaker Super Micro Computer , as well as AI infrastructure firms Coreweave and Nebius Group , the report showed.

• All three were ​in the top 10 most shorted stocks in July across the firm's hedge fund client base, which it says has more than ⁠700 funds. They were also in the top 10 in June, but each saw that short positioning ​grow.

• July saw some nervousness about chipmakers and the AI trade, on investor concern about valuations and the sustainability ​of their bumper revenues. U.S. chip ‌stocks dropped 20%, while Korea's tech-heavy Kospi index fell 22%. - both indexes posted their biggest monthly fall since 2008.

• ⁠Hedge funds also reduced long positions and raised short positioning in chip giant Nvidia, Hazeltree said, though funds in aggregate were still long.

• Coreweave shares jumped ⁠in extended trading on Tuesday after it beat second quarter estimates. High short positioning ​can contribute to dramatic moves higher in a share price — a so-called short squeeze — where a rally can force investors who are short to buy back the ‌shares, even at a loss.

• "Wall Street took profits in some of the year's biggest AI infrastructure winners without ‌abandoning the trade altogether, instead redeploying capitalinto companies that have shown signs of ⁠monetisation. A similar unwind played ‌out in leveraged semiconductor ​bets, with investors trimming borrowed risk rather than exiting AI exposure entirely," Hazeltree said.

(Reporting by Alun John; Editing by ‌Amanda Cooper)

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