The average US long/short equity hedge fund has achieved an 8% return since the start of 2024, driven by the robust performance of the well-known stocks.

Aside from Tesla (NASDAQ:), the Magnificent 7 group dominates the top six spots on the bank’s list of most popular long positions, which have collectively returned 16% year-to-date.

However, reflecting a broadening equity market, hedge funds have reduced their exposure to mega-cap tech stocks to seek out other alpha opportunities.

“AAPL was the exception and screened into our Rising Stars list of the stocks with the largest increases in hedge fund popularity,” Goldman strategists said in a Tuesday note.

“Funds continued to buy cyclicals, including lifting Financials to the largest tilt since 2012,” they added.

The Bank of New York Mellon (NYSE:), Discover Financial Services (NYSE:), and S&P Global also joined Goldman’s ‘Rising Stars’ list of stocks.

While cutting mega-cap exposure, hedge funds have also been increasing investments in broader AI beneficiaries, particularly those within the Phase 2 infrastructure – companies involved in building the necessary foundation to support AI growth beyond the initial phase.

More concretely, stocks like Marvell (NASDAQ:) Technology, Synnex Corporation, AES (NYSE:) Corporation, and (NASDAQ:) have seen the largest increase in hedge fund popularity within this segment, per Goldman.

“Among the various phases of the AI trade, firms exposed to AI infrastructure investment have recently performed best and captured the most interest in our client conversations,” strategists said in the note.

“As a result of this outperformance, the weight of Semiconductors in the aggregate US hedge fund long portfolio soared during 1Q to a record-high of 6.5%,” they added.

Goldman highlighted MRVL as the top Rising Star among hedge fund investments. Meanwhile, AI-focused memory chipmaker Micron (NASDAQ:) has been added to their basket of favorite long positions for hedge funds.