Hedge funds increased bearish positions in several AI-related stocks in July as investors grew more cautious about semiconductor valuations and whether the sector’s record earnings growth can be sustained. Hazeltree said Super Micro Computer, CoreWeave and Nebius Group were all among the 10 most shorted stocks across its hedge fund client base of more than 700 funds, with short positioning in each name rising further from June. The data platform also said funds reduced long positions and increased shorts in Nvidia, although hedge funds overall still remained net long the chipmaker. The positioning shift came during a sharp selloff in technology shares, with the Philadelphia Semiconductor Index down 20% in July and South Korea’s tech-heavy KOSPI falling 22%, both recording their biggest monthly declines since 2008. CoreWeave later rose in after-hours trading on August 11 after beating second-quarter expectations, highlighting the risk of a short squeeze, when a rally forces short sellers to buy back shares at a loss. Hazeltree said investors were taking profits in some of the year’s strongest AI infrastructure winners while rotating capital toward companies showing signs of monetization, suggesting a more selective approach to AI exposure rather than a full retreat.