Key Takeaways
- • Perseverance Asset Management International cut its Nvidia holdings by 72% in Q2 2026, while significantly increasing positions in memory chipmaker Micron Technology and flash memory maker SanDisk, signaling a strategic pivot away from hyperscaler exposure.
- • Leading Chinese hedge funds including Greenwoods Asset Management Hong Kong and Oriental Harbor Investment executed similar portfolio rotations during the same period, moving capital from major US tech stocks into AI hardware supply chain vendors including memory chip and optical transceiver manufacturers.
- • The rotation reflects a maturing AI investment thesis, where Chinese institutional investors are shifting from indiscriminate exposure to AI compute infrastructure to more selective positioning in upstream hardware beneficiaries, as mega-cap tech stocks face valuation pressure from doubts about AI capex monetization.
- • Market observers characterize the shift as a natural evolution in the AI trade cycle, with Stephen Innes of SPI Asset Management noting the market has moved beyond the initial stage of "buying everything exposed to compute" into a more demanding, selective phase.
Summary
China's largest hedge funds executed a significant rebalancing of their portfolios during the second quarter of 2026, systematically reducing exposure to US hyperscalers and Nvidia while rotating capital into upstream AI hardware manufacturers. According to 13F regulatory filings analyzed by the South China Morning Post, this shift represents a fundamental recalibration of Chinese institutional investors' approach to the global AI trade.
Perseverance Asset Management International led the repositioning with a dramatic 72% reduction in Nvidia holdings during Q2. Simultaneously, the fund increased allocations to memory chipmaker Micron Technology and flash memory product manufacturer SanDisk—both integral to AI data center infrastructure. The Hong Kong operations of Greenwoods Asset Management and Oriental Harbor Investment, both ranked among mainland China's top hedge funds, executed comparable portfolio adjustments during the same period, shifting away from large-cap technology equities and toward specialized hardware makers benefiting from AI infrastructure deployment.
The portfolio rebalancing reflects a structural shift in how institutional investors are analyzing the AI investment narrative. Rather than maintaining broad exposure to companies spending heavily on AI infrastructure buildout, sophisticated hedge fund managers are becoming increasingly selective about which segments of the AI supply chain offer superior risk-adjusted returns. Shares of tech hardware manufacturers—particularly memory chip producers and optical transceiver makers used in AI data centers—have outperformed during recent months, while mega-cap technology stocks have languished amid investor skepticism about whether massive capital expenditures will translate into meaningful monetization.
Market observers characterize this rotation as evidence that the AI trade is maturing beyond its initial speculative phase. Stephen Innes, managing partner at SPI Asset Management, framed the shift as the market's natural evolution: "This is the point where the AI trade begins growing up. The first stage was about buying everything exposed to compute." The second phase, evident in these Chinese hedge fund moves, reflects a more sophisticated assessment of which participants in the AI ecosystem are positioned to generate sustainable returns as the infrastructure buildout continues but becomes increasingly rationalized.
Perseverance Asset Management International led the repositioning with a dramatic 72% reduction in Nvidia holdings during Q2. Simultaneously, the fund increased allocations to memory chipmaker Micron Technology and flash memory product manufacturer SanDisk—both integral to AI data center infrastructure. The Hong Kong operations of Greenwoods Asset Management and Oriental Harbor Investment, both ranked among mainland China's top hedge funds, executed comparable portfolio adjustments during the same period, shifting away from large-cap technology equities and toward specialized hardware makers benefiting from AI infrastructure deployment.
The portfolio rebalancing reflects a structural shift in how institutional investors are analyzing the AI investment narrative. Rather than maintaining broad exposure to companies spending heavily on AI infrastructure buildout, sophisticated hedge fund managers are becoming increasingly selective about which segments of the AI supply chain offer superior risk-adjusted returns. Shares of tech hardware manufacturers—particularly memory chip producers and optical transceiver makers used in AI data centers—have outperformed during recent months, while mega-cap technology stocks have languished amid investor skepticism about whether massive capital expenditures will translate into meaningful monetization.
Market observers characterize this rotation as evidence that the AI trade is maturing beyond its initial speculative phase. Stephen Innes, managing partner at SPI Asset Management, framed the shift as the market's natural evolution: "This is the point where the AI trade begins growing up. The first stage was about buying everything exposed to compute." The second phase, evident in these Chinese hedge fund moves, reflects a more sophisticated assessment of which participants in the AI ecosystem are positioned to generate sustainable returns as the infrastructure buildout continues but becomes increasingly rationalized.
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