Hedge funds and mutual funds with $6 trillion are Wall Street's well-deserved “smart money.” According to the latest quarterly holdings reports of the two major funds, hedge funds and mutual funds have both reduced the stock positions of the Big Seven US stocks, but they are still holding on to the main AI investment line and betting heavily on “Nvidians” in other industries.

Funds from all sides are pouring into the AI circuit. In addition to chips and technology, traditional utilities, energy, and materials fields are all “blossoming a bit more.” So, what kind of AI investment logic do these two major funds revolve around? Goldman Sachs listed the “three major stages” of future AI investment and sorted out the investment context in these.

Seven Sisters no longer fragrant? Wall Street's “smart money” explores other AI industry chains

The latest analysis report on Goldman Sachs hedge fund and mutual fund holdings at the end of the quarter shows that these two “smart money” both reduced their holdings of the Big Seven US stocks in the first quarter and instead invested in stocks in the broader artificial intelligence industry chain. The scope of the report's statistics covers 707 hedge funds with a total share position of 2.7 trillion US dollars, and 482 mutual funds with assets under management of 3.3 trillion US dollars.

Among them, hedge funds reduced positions in Google, Amazon, Nvidia, Microsoft, and Meta in the first quarter. Among the “Seven Sisters,” only Apple was not reduced by hedge funds. However, according to Goldman Sachs analysis, this reduction in holdings may be to cope with the continuous expansion of the benchmark weight of the Big Seven holdings in order to meet the requirements for diversification of investment. With the exception of Tesla, most tech giant stocks are still the most important holdings of these two major funds.

However, despite the decline in popularity of large technology stocks, the two big smart money still firmly grasped investment opportunities on artificial intelligence themes and instead invested in stocks in the broader AI industry chain. As data centers require large amounts of energy to run AI jobs, investment in utilities by both major funds reached a 10-year high. In addition, companies that can drive productivity through AI are also favored targets.

Specifically, according to Goldman Sachs's report, the main targets of the two major funds to increase their holdings in the first quarter include —

• Companies that provide resources such as electricity and copper for AI infrastructure construction:$Vistra Energy (VST.US)$,$The AES Corp (AES.US)$,$Freeport-McMoRan (FCX.US)$

• Companies that manufacture the electronic components required for the chip:$Vertiv Holdings (VRT.US)$,$Littelfuse (LFUS.US)$,$Amphenol (APH.US)$

• Cloud computing and software distribution companies:$ServiceNow (NOW.US)$,$Cloudflare (NET.US)$

• Software service company:$TD Synnex (SNX.US)$,$Cognizant (CTSH.US)$,$Adobe (ADBE.US)$

• Chip manufacturers:$Marvell Technology (MRVL.US)$,$Micron Technology (MU.US)$

• Other companies that can improve efficiency through AI technology: financial insurance companies$First American Financial (FAF.US)$,$Willis Towers Watson (WTW.US)$; Pharmacy chain company$Walgreens Boots Alliance (WBA.US)$, tech giants$Apple (AAPL.US)$

(The above lists only some of the targets)

The opportunities are not limited to chip stocks! Every industry has its own “Nvidia”

Goldman Sachs said that under the AI wave sweeping the world, the leading position of chip stocks such as Nvidia in the AI field cannot be ignored, but this is only the beginning and represents the first stage of AI investment. Looking forward to the future, this AI development trend will gradually enter three key stages, and the two major funds mentioned above also select stocks based on this investment logic. The detailed analysis is as follows:

The second phase is the infrastructure phase, which focuses on companies other than Nvidia involved in AI infrastructure, such as semiconductor companies, cloud service providers, data center REITs, hardware and equipment companies, software security stocks, and utility companies. The second phase represents companies including chip design companies$Marvell Technology (MRVL.US)$,$Synopsys (SNPS.US)$, Nvidia's exclusive liquid cooling partner$Vertiv Holdings (VRT.US)$, and the nation's largest electricity producer$Vistra Energy (VST.US)$;

The third phase is AI empowerment, involving companies that incorporate AI into their products to increase revenue, such as software and IT service companies. Corresponding companies include ride-hailing software$Uber Technologies (UBER.US)$, financial management software$Intuit (INTU.US)$, payment company$MasterCard (MA.US)$, cloud computing company$ServiceNow (NOW.US)$and$Cloudflare (NET.US)$;

The final fourth stage is the “productivity improvement” stage, which mainly focuses on companies from all walks of life that use AI technology to improve production efficiency, especially labor-intensive industries such as software services and business services. The targets listed here include insurance brokerage companies$Willis Towers Watson (WTW.US)$, software service outsourcing company$Cognizant (CTSH.US)$.

For investors looking to seek AI investment opportunities through ETFs, Goldman Sachs recommended several options, including$iShares US Technology ETF (IYW.US)$，$Ishares Global Tech Etf (IXN.US)$，$Fidelity Covington Trust Msci Information Technology Index Etf (FTEC.US)$und$Ishares North American Tech Etf (IGM.US)$Investing in ETFs can also help you better grasp the trends and opportunities of AI investment.

Artificial intelligence has become popular among stocks related to it, and “wizards” from all walks of life have surfaced, far more than Nvidia. Previously, Futu Information compiled the AI investment industry chain as follows for investors' reference:

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