Latest 13F filings reveal that the first quarter of 2025 saw institutional investors significantly retreating from the technology sector, indicating a notable shift away from the Magnificent 7 stocks that have long led market gains.
What Happened: Institutional managers collectively shed 8.4 billion shares across Nvidia Corp. NVDA, Apple Inc. AAPL, Amazon.com Inc. AMZN, Microsoft Corp. MSFT, and A-class shares of Google parent company Alphabet Inc. GOOGL during the first quarter.
According to Adam Turnquist, the chief technical strategist at LPL Financial, the first three months of 2025, despite starting with strong momentum, ended on a weak note. “Rising macro turbulence and a threat to U.S. tech dominance led institutional investors to act, and the latest 13F filings provide key insights,” he said.
The dramatic reduction in technology allocations, which saw a 2.7% decrease by institutional investors, more than reversed the modest 0.7% addition to the sector in the final quarter of 2024.
This pivot was partly fueled by the “January DeepSeek upheaval” and increasing scrutiny around artificial intelligence capital expenditure, which contributed to a dissipation of big tech leadership. Nvidia, Apple, and Amazon bore the brunt of this selling, identified as the top three names for institutional selling.
Concurrently, there was a noticeable flight to more defensive sectors. Institutional managers increased allocations to financial companies by another 0.6%, building on the 0.6% increase from the fourth quarter of 2024.
Healthcare and consumer staples also saw increased positions, rising by 0.8% and 0.3% respectively, as investors sought refuge amidst increasing trade uncertainty, cracks in the AI theme, and economic growth fears. Conversely, allocations towards cyclical consumer discretionary were reduced by 0.6%.
Among the broader market movements, top institutional buys included aircraft manufacturer StandardAero Inc. SARO and Ingram Micro Holding Corp. INGM, with managers adding 241.3 million and 233.0 million shares, respectively.
Why It Matters: The tech sell-off was largely driven by “mounting tariff uncertainty and softening economic data,” which spurred institutional investors to reassess their positions, explained Turnquist.
On the other hand, university endowments took a contrarian stance as compared to institutional investors.
While hedge fund managers mirrored the broader trend by cutting technology positions and shifting to financials, healthcare, and consumer staples, endowments, with their unique infinite time horizon, went “risk on” last quarter.
They notably axed aggregate healthcare allocations by 4.7% and strategically bolstered their tech positions by 1.6%, taking advantage of the sector’s slide.
Warren Buffett captivated headlines with yet another mystery stock. Berkshire Hathaway Inc. BRK BRK utilized confidential treatment from regulators to keep one or more positions secret, a rare move that allows the “Oracle of Omaha” to build positions without immediately impacting price action, much like his prior accumulation of Chubb Ltd. CB shares.
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, ended higher on Tuesday. The SPY was up 0.57% to $603.08, while the QQQ advanced 0.66% to $534.21, according to Benzinga Pro data.
The futures of the Dow Jones, S&P 500, and Nasdaq 100 indices fell on Wednesday.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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