US hedge funds trim Magnificent Seven stocks in the third quarter, signaling a pivot away from the year’s most crowded Big Tech trades and toward application software, e‑commerce, and payments. Newly filed 13‑Fs show reductions across Nvidia, Amazon, Alphabet, and Meta, even as funds added select positions elsewhere, underscoring a rotation after AI‑driven valuations began to cool.
Key Points
Wall Street’s latest disclosures cover portfolios as of Sept. 30. Markets were broadly higher over the period, with the S&P 500 up nearly 8% and the Nasdaq 100 rising about 9%, while benchmark 10‑year yields fell roughly seven basis points on expectations of monetary easing.
Why US Hedge Funds Trim Magnificent Seven in Q3
The data point to a tactical step back from Big Tech leaders after a strong first half. Several marquee managers reduced exposure to the group, reflecting a reassessment following the second quarter’s enthusiasm for AI beneficiaries. As valuations eased from lofty levels, US hedge funds trim Magnificent Seven holdings became a defining theme of the quarter’s positioning.
The same filings also show a tilt toward application software, e‑commerce, and payments—areas where managers sought fresh catalysts beyond the mega‑cap complex.
Bridgewater leads reductions while rotating to software and payments
Bridgewater Associates, which logged a strong performance through the first nine months of the year, sharply cut several Big Tech stakes:
- Slashed Nvidia by nearly two‑thirds to 2.5 million shares
- Reduced Alphabet by more than 50% to 2.65 million shares
At the same time, it leaned into other sectors, boosting positions in Adobe, Dynatrace, and Etsy. Bridgewater also increased its stake in Fiserv. US hedge funds trim Magnificent Seven moves were therefore paired with a clearer preference for software and payments exposure.
A Bridgewater spokesperson declined to comment on the fund’s latest positions.
Tiger Global and Lone Pine scale back Meta; Coatue pares Nvidia
Two well‑known stock‑picking firms pulled back on Meta Platforms:
- Lone Pine Capital cut its Meta stake by 34.8%
- Tiger Global reduced Meta by 62.6%
Coatue Management—known for large AI and tech bets—joined Bridgewater in trimming Nvidia, lowering its holdings by 14.1% to 9.9 million shares. US hedge funds trim Magnificent Seven positioning, thus extending beyond a single name, touching multiple leaders within the cohort.
Discovery Capital’s new bets: Alphabet, Cleveland‑Cliffs, health insurers
Discovery Capital Management, founded by Rob Citrone, added several new positions:
- Alphabet
- Cleveland‑Cliffs
- Health insurers Cigna and Elevance Health
Discovery also made a stake in payments software firm Fiserv. Both Discovery and Bridgewater made their Fiserv moves before the company reported disappointing results and reduced revenue guidance for a second consecutive quarter—news that erased about $30 billion in market value in a single day.
US hedge funds trim Magnificent Seven at the same time they deploy capital into selected new names speaks to a broader spread across industries and balance sheets.
Balyasny boosts Apple; Berkshire reveals new Alphabet stake
Multi‑strategy firm Balyasny Asset Management increased its exposure several‑fold to Apple, bucking the broader trimming trend among some peers.
Separately, Berkshire Hathaway disclosed a $4.3 billion stake in Alphabet while further reducing Apple in its latest filing. The move added another high‑profile data point to a quarter marked by re‑ranking among the largest tech holdings. In aggregate, the pattern—US hedge funds trim Magnificent Seven while making targeted additions—captured the tone of the filings.
Market backdrop: stocks up, yields down
The third quarter’s tape offered a supportive backdrop. The S&P 500 gained nearly 8%, while the tech‑heavy Nasdaq 100 rose about 9%. Bonds posted gains as well, with 10‑year Treasury yields down roughly seven basis points. Against that environment, US hedge funds trim Magnificent Seven actions suggest managers used strength to rebalance and manage risk after a powerful run in AI‑linked names.
Where the money went: application software, e‑commerce, payments
The filings show interest coalescing around:
- Application software (Adobe, Dynatrace)
- E‑commerce (Etsy)
- Payments infrastructure (Fiserv)
These shifts indicate managers hunting for growth and cash‑flow resilience outside the tight cluster of mega‑caps. US hedge funds trim Magnificent Seven while leaning into vertical software and transaction rails, pointing to a more diversified approach to tech exposure.
What 13‑F filings reveal—and what they don’t
Form 13‑F filings are backward‑looking snapshots of long U.S. equity positions as of quarter‑end. They do not disclose current holdings, intraday activity, or any short positions. Still, they offer a window into the positioning of often‑secretive funds and help explain how themes—like US hedge funds trim Magnificent Seven—are playing out in real portfolios.
Health care and energy: exposure eased
Beyond Big Tech, several funds pared holdings in selected health care and energy names during the quarter. This reduction aligned with a broader slimming of cyclical and defensive bets as managers recalibrated risk in portfolios where Big Tech exposure had previously done the heavy lifting.
US hedge funds trim Magnificent Seven while moderating health care and energy, suggesting a deliberate rotation rather than a simple de‑risking, with capital redirected toward software, e‑commerce, and payments.
Fiserv: a reminder about timing risk
The Fiserv sequence highlights the timing risk inherent in quarterly filings. Bridgewater added to the name, and Discovery initiated a position before Fiserv delivered a second straight revenue guidance cut. The stock subsequently lost about $30 billion in market cap in a single day. US hedge funds trim Magnificent Seven, but new positions can still face company‑specific shocks before the next disclosure arrives.
Why this rotation matters now
- Position concentration: After an AI‑fueled surge, trimming mega‑cap stakes can reduce single‑name risk.
- Valuation discipline: Easing lofty multiples can prompt rotation into sectors where growth is priced more reasonably.
- Breadth and balance: Adding software and payments may broaden tech exposure without relying on the same leaders.
For investors tracking fund flows, US hedge funds trim Magnificent Seven is a signal of how the most watched managers are rebalancing while still favoring tech‑adjacent growth.
Reactions and updates
- Bridgewater declined to comment on individual positions.
- Other funds cited in the filings did not immediately respond to requests for comment.
- The disclosures arrive as markets digest a quarter of rising equities, modestly lower yields, and a comedown in AI‑driven valuations—all factors that shaped US hedge funds to trim Magnificent Seven strategies.
Conclusion
US hedge funds trim Magnificent Seven holdings defined the third quarter’s fund disclosures, with Bridgewater, Tiger Global, Lone Pine, and Coatue among those paring mega‑cap tech stakes. Discovery Capital added new positions in Alphabet, Cleveland‑Cliffs, and major health insurers, while Balyasny boosted Apple and Berkshire revealed a sizable Alphabet stake alongside another Apple reduction.
The filings show a rotation toward application software, e‑commerce, and payments, even as the broader market advanced and yields slipped. Because 13‑Fs are backward‑looking and exclude shorts, they are snapshots, not roadmaps. But taken together, they capture a clear message from the quarter: US hedge funds trim Magnificent Seven, seek balance elsewhere, and recalibrate risk after a powerful AI‑driven run.
FAQ’s
Which funds cut exposure to the Magnificent Seven in Q3?
Bridgewater slashed Nvidia by nearly two‑thirds and cut Alphabet by 50%+, while Tiger Global and Lone Pine pared Meta. Coatue also trimmed Nvidia holdings.
Why are hedge funds rotating out of Big Tech now?
After an AI‑driven surge, valuations began to cool. Managers rebalanced toward application software, e‑commerce, and payments to diversify growth drivers and manage concentration risk.
What new or bigger positions stood out?
Discovery Capital opened stakes in Alphabet, Cleveland‑Cliffs, Cigna, and Elevance; Bridgewater added Adobe, Dynatrace, Etsy, and Fiserv; Balyasny boosted Apple. Note: filings are backward‑looking.
What do 13F filings tell investors?
13Fs show long U.S. equity positions as of quarter‑end; they exclude shorts and real‑time trades. They’re useful for spotting themes—like funds trimming Magnificent Seven—but not current allocations.
