Institutional investors are aggressively rotating into the semiconductor sector, driving hedge fund market exposure to unprecedented levels as major Wall Street players increased their stakes during the first quarter of 2026.
Historic Shift In Market Exposure
According to recent market commentary from The Kobeissi Letter, institutional investors are officially “all-in on semiconductor stocks.” The semiconductor sector now accounts for 19% of total global hedge fund market exposure, establishing the “highest on record.”
This exposure has more than “DOUBLED” since the start of 2026. This dramatic rotation toward semiconductors comes directly at the expense of software and services stocks, which now account for roughly 2% of hedge fund portfolios, reflecting a 10-percentage-point decline over the last four years.
Major Players Load Up On SOXX
Recent 13F filings detailing first-quarter positioning for the iShares Semiconductor ETF (NASDAQ:SOXX) reveal exactly which institutions are driving this “extremely bullish” momentum.
Susquehanna International Group executed a massive portfolio upgrade, boosting its SOXX holdings by 476%, jumping from 250,753 shares in the fourth quarter of 2025 to over 1.44 million shares in the first quarter of 2026.
Financial heavyweights Goldman Sachs and BNP Paribas also aggressively loaded up on the ETF. Goldman Sachs increased its position by 17% to 3.38 million shares, while BNP Paribas boosted its holdings by 58% to 1.85 million shares.
Leaving Bear Market Behind
This record-breaking enthusiasm paints a stark contrast to the depths of the 2022 bear market, when semiconductor stocks represented less than 2% of global hedge fund exposure.
Over this period, the semiconductor index, PHLX Semiconductor Sector, has rallied 57.66% year-to-date and 129.62% over the year, while the ETF tracking it, SOXX, gained 62.62% and 132.66% in the same period.
While the smart money is overwhelmingly chasing the chip rally, the bullishness is not unanimous. This comes as Morgan Stanley completely liquidated its 2.36 million share position in the SOXX ETF during the first quarter. Despite this exit, the broader data cements a historic institutional appetite for the industry.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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