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Hedge Funds Double Down on Big Tech Amid AI Boom

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Top Wall Street hedge funds, including Bridgewater Associates, Tiger Global Management, and Discovery Capital, increased their exposure to Big Tech stocks in the second quarter, capitalizing on a generational surge in artificial intelligence.

Funds reduced their holdings in lagging sectors such as aerospace, defense, consumer, and retail, returning to momentum investing as tech stocks staged a strong comeback. The S&P 500 (.SPX) is up 10% this year, largely driven by the largest technology companies, which make up nearly a third of the index’s market capitalization.

Outside tech, hedge funds like Lone Pine, Discovery, and Soros Fund Management also added positions in UnitedHealth Group (UNH.N), while Berkshire Hathaway unveiled new stakes. UnitedHealth shares are down 46% this year amid rising costs, a DOJ probe, a cyberattack, and the shooting of a former executive.

Quarterly 13F filings revealed these key hedge fund moves:

BRIDGEWATER ASSOCIATES:

  • Added significantly to Nvidia (NVDA.O), Alphabet (GOOGL.O), and Microsoft (MSFT.O).

  • Nvidia stake more than doubled to 7.23 million shares ($1.14B).

  • Alphabet and Microsoft increased by 84.1% and 111.9%, respectively.

  • Added Broadcom (+102.7%) and Palo Alto Networks (+117%).

DISCOVERY CAPITAL:

  • Doubled stake in America Movil (AMXB.MX) to 2.65 million shares ($95M).

  • More than doubled Meta Platforms (META.O) holdings and took a new position in Nvidia-backed CoreWeave (CRWV.O).

  • Increased UnitedHealth stake by 13%.

TIGER GLOBAL MANAGEMENT:

  • Bought more shares in the “Magnificent Seven”: Amazon (AMZN.O), Alphabet, Nvidia, Microsoft, and Meta.

  • Added ~4M Amazon shares, ending June with 10M shares ($2.34B).

  • Increased stakes in smaller AI-related companies such as Lam Research (LRCX.O).

COATUE MANAGEMENT:

  • Added new positions in Arm Holdings and Oracle (ORCL.N), worth ~$750M and $843M.

  • Increased holdings in Nvidia-backed CoreWeave to 3.39M shares ($2.9B).

LONE PINE CAPITAL:

  • Took a new position in UnitedHealth, buying 1.69M shares worth ~$528M.

These moves illustrate a clear pivot toward technology and AI-driven growth opportunities by major hedge funds in the wake of market volatility and tariff concerns earlier this year.

UnitedHealth Tech Unit Hack Affected 192.7 Million People

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A cyberattack on UnitedHealth Group’s (UNH.N) technology unit, Change Healthcare, last year affected 192.7 million people, according to the U.S. Department of Health and Human Services (HHS). The company had previously estimated the breach impacted 190 million individuals.

Disclosed in February 2024, the attack—identified as the largest healthcare data breach in U.S. history—was carried out by hackers claiming to be part of the “Blackcat” ransomware group. The breach caused widespread disruptions in claims processing and affected patients and healthcare providers nationwide.

A UnitedHealth spokesperson confirmed, “The final total number of individuals impacted by the Change Healthcare cyberattack is approximately 192.7 million,” noting that state-by-state figures may vary.

Compromised data is believed to include health insurance member IDs, patient diagnoses, treatment records, social security numbers, and provider billing codes. The breach is now listed in HHS’s official database of healthcare data breaches maintained by its Office for Civil Rights.

Healthcare Stocks Drop Amid Push for Legislative Changes to Business Models

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Shares of major healthcare companies, including UnitedHealth Group, Cigna, and CVS Health, dropped by up to 5% on Wednesday as concerns mounted over new legislation and public backlash that could disrupt their business operations. These companies, which are key players in the private health insurance sector and pharmaceutical supply chain, also face increasing pressure from lawmakers and patients to change their business practices.

The decline in stock prices follows the introduction of bipartisan legislation aimed at breaking up pharmacy benefit managers (PBMs), which are companies that act as intermediaries between insurers, pharmacies, and drug manufacturers. The legislation, first reported by The Wall Street Journal, targets the growing scrutiny PBMs have faced for inflating drug prices to boost profits, a practice that has drawn the attention of both Congress and the Federal Trade Commission (FTC).

Shares of UnitedHealth Group, Cigna, and CVS Health, which also own pharmacy businesses, all closed down at least 5% following the news. This stock movement comes at a time when insurance companies are already under public scrutiny, particularly after the tragic shooting of Brian Thompson, the CEO of UnitedHealth Group’s insurance arm, last week, which had already caused a dip in healthcare stocks.

The new Senate bill, backed by Senators Elizabeth Warren (D-Mass.) and Josh Hawley (R-Mo.), proposes that companies owning both health insurers and PBMs divest their pharmacy operations within three years. According to The Wall Street Journal, a companion bill is also expected to be introduced in the House.

Warren criticized PBMs for driving up drug costs and harming small pharmacies. “My new bipartisan bill will untangle these conflicts of interest by reining in these middlemen,” she said, emphasizing the negative impact PBMs have on both patients and independent pharmacies.

The largest PBMs in the U.S., including Optum Rx (UnitedHealth), Caremark (CVS), and Express Scripts (Cigna), collectively manage around 80% of the country’s prescriptions, according to the FTC. These companies play a central role in negotiating drug prices and administering insurance formularies, creating potential conflicts of interest when they also own pharmacies.