Hedge funds moved to reduce exposure to the largest U.S. technology companies just ahead of a highly anticipated initial public offering, according to a late Thursday note from JPMorgan. The firm said managers sold the so-called "Magnificent Seven" stocks and, in some instances, opened or expanded bearish positions as markets approached Friday's SpaceX listing.
The "Magnificent Seven" refers to a group of the largest technology names: Nvidia, Apple, Amazon.com, Alphabet, Meta, Tesla, and Microsoft. JPMorgan reported that these shares had fallen since the prior Friday. The Roundhill Magnificent Seven ETF, which closely tracks that cohort, declined by over 2.4% from June 5, a drop some analysts attributed to investors clearing positions ahead of the SpaceX debut.
SpaceX reported a net loss of $4.94 billion for 2025 and was targeting a $1.77 trillion valuation in its planned listing - a level that would rank the company as the seventh-largest publicly traded U.S. company by market capitalization if achieved. The JPMorgan note connected these market movements to broader risk rebalancing by hedge funds.
JPMorgan summarized trading activity and fund behavior with several specific observations:
- Magnificent Seven stocks experienced market selling as investors scaled back risk positions.
- Some speculative traders bought on the dip.
- In the U.S., software stocks were heavily sold late last week while semiconductor manufacturers saw "strong demand."
- Financial firm-themed ETFs were the most purchased sector over the prior week.
- JPMorgan noted that financial stocks tend to perform well at this time of year.
The note included intraday price markers and percentage moves appearing in market feeds: MSFT-1.77% GOOGL+0.39% AAPL+1.39% AMZN+1.47% NVDA+2.22% TSLA+4.6% META-0.45% MAGS+1.07% SPCX0.00%.
JPMorgan also described hedge fund positioning across other parts of the market. Funds were mixed on financial sector exposure, with some selling bank stocks. The note recorded that hedge funds had recently purchased insurance company shares, yet the financial sector overall remained "heavily sold" year to date, with traders holding far fewer wagers on those companies than in prior periods. Within asset management, funds showed a preference for traditional asset managers over alternative asset managers.
As part of the broader coverage, the article referenced a tool aimed at assessing valuation: "Is MSFT a bargain right now? The fastest way to find out is with our Fair Value calculator. We use a mix of 17 proven industry valuation models for maximum accuracy." The mention framed a method for evaluating Microsoft alongside thousands of other stocks.
The JPMorgan note paints a picture of position reshuffling across large-cap technology, software, semiconductors, and financial-themed ETFs in the run-up to a major market event. It highlights both selling pressure and selective buying flows - particularly into semiconductors and financial firm ETFs - while noting that some speculators sought to pick up positions following the pullback in the biggest tech names.