In a surprising move ahead of the financial results season, global hedge funds have reduced their exposure to the stocks of the "big seven" companies to its lowest level in two years, according to a recent memo from Morgan Stanley that was reviewed by Reuters. According to the memo, the stocks of these companies accounted for more than 60% of the total dollar value of the shares that hedge funds sold during the period between Monday and Wednesday of last week, reflecting a bearish sentiment among portfolio managers regarding the future of these giant companies. Tesla, owned by Elon Musk, will kick off the earnings season for the "big seven" stocks on April 22, followed by Alphabet, the owner of the Google search engine, on April 24. It is worth noting that all stocks of the big seven companies, which include Apple, Microsoft, Amazon, Nvidia, Meta, in addition to Tesla and Alphabet, have underperformed compared to the S&P 500 index since the beginning of 2025. Alphabet's shares have dropped by nearly 22%, while Tesla's shares have fallen by about 44%. This shift comes amid a broader change in investors' strategies toward these companies, as a recent survey conducted by Bank of America showed that 60% of investors believe that large-cap companies are still the most traded, but only 24% consider them to represent the best current opportunity. Conversely, gold has become the most preferred investment option among investors, according to 49% of survey participants. Morgan Stanley pointed out that the selling was not limited to large tech company stocks only, but extended across multiple sectors, including health insurance, aerospace and defense, biotechnology, hotels, restaurants, and entertainment, reflecting a broader trend of restructuring investment portfolios in anticipation of upcoming market volatility.
