By Peter Rudegeair
The hedge-fund herd was early to see opportunity in the stocks of chip makers and other artificial-intelligence hardware companies. Those bets just delivered stock-picking funds their best month in over two decades.
Steve Cohen's Point72, Whale Rock Capital Management and Seligman Investments are among the hedge-fund firms that posted strong returns in April thanks in part to rallies in semiconductor stocks and those of related equipment makers.
That helped make April the best month for stock-picking funds since December 1999, according to an industry index compiled by research firm PivotalPath, with a gain of 6.5%. For PivotalPath's index of tech-focused funds, April's 10.3% gain was the best month since its data series began 28 years ago.
The rapid adoption of AI coding tools and AI agents brought with it a broad, ravenous appetite for computing resources, from central processing units made by Intel to memory chips made by Sandisk. Much of the $670 billion in capital spending that Microsoft, Alphabet, Meta Platforms and Amazon.com are planning this year will go toward data centers full of advanced chips. Customer demand for AI that they and others are forecasting is driving up chip prices and leading them to agree to longer-term contracts with suppliers.
As a result, many semiconductor stocks are notching triple-digit percentage gains this year, capped by Samsung Electronics' entry into the club of companies with trillion-dollar market values last week.
Recent monthly returns are better than what many fund managers report over the course of an entire year. The publicly traded stock portfolio of Alex Sacerdote's Whale Rock was up about 39% in April, people familiar with the matter said. Its positions in Sandisk, South Korean memory-chip maker SK Hynix and Japanese memory-chip maker Kioxia Holdings were big winners for the firm, one of the people said.
"In addition to AI being the most compute intensive thing we've ever seen and shortages as far as the eye can see, we're in a golden age of hardware," Sacerdote said at the Sohn Investment Conference on Tuesday. "All of these companies that nobody used to ever pay attention to are now golden, wonderful businesses."
The semiconductor industry is notoriously cyclical, with shortages often followed by gluts. Shares in chip makers soared during the Covid-19 pandemic when consumers splurged on laptops, smartphones and other devices laden with silicon. They slumped in the years that followed when demand normalized and extra capacity the industry added went unused.
Point72's flagship fund gained about 4.5% in April, its best month in over five years, people familiar with its performance said. Point72's Turion, an AI-focused hedge fund that Cohen launched with portfolio manager Eric Sanchez, gained 15% in April, the people said.
The Seligman Tech Spectrum fund, led by portfolio manager Paul Wick, gained nearly 20% in April, according to an investor update viewed by The Wall Street Journal. That was its best month since the fund launched in 2001. Assets in the hedge-fund strategy of Seligman, a unit of Columbia Threadneedle Investments, totaled $4.5 billion in February.
Wick said in a March letter to investors that the fund's top five holdings in the prior month included chip maker Broadcom, chip-equipment makers Applied Materials and Lam Research, and Bloom Energy, a power provider for AI data centers.
Overall fund performance is notable given that the macroeconomic backdrop includes a war with Iran, higher consumer prices and inflation expectations, and lower chances of Federal Reserve rate cuts in coming months. The AI trade, even after some bumps late last year, has so far overpowered those hurdles.
Hedge funds are more overweight semiconductor stocks than at any point in the past decade. The industry went from 5.5% of hedge-fund portfolios on net this time last year to 20% at present, according to Morgan Stanley. Shares of companies in the AI supply chain drove nearly two-thirds of the returns on hedge funds' positions in rising stocks last month, the bank found.
Hedge funds' winning streak has continued in May, with the average global hedge fund up about 1.4% this month through last Thursday, according to Morgan Stanley. The bank told clients that hedge funds "have been off to a hot start to the month in large part due to their outsize exposure to the broader AI theme."
Write to Peter Rudegeair at peter.rudegeair@wsj.com
(END) Dow Jones Newswires
May 13, 2026 21:00 ET (01:00 GMT)
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