By Ketki Saxena
Investing.com As the world continues to reel from the impact of COVID-19, some industries have emerged stronger than ever. One such industry is technology. However, while many investors are enjoying the gains made by high-growth companies in this sector, others are feeling the pinch of their bets gone wrong.
Hedge funds that bet against US technology stocks have lost a whopping $18bn after Big Tech’s robust earnings fueled a sharp rebound in the sector.
Despite pessimistic expectations, several stocks with high levels of short bets against them have defied odds by producing better-than-expected earnings, such as Microsoft (NASDAQ:MSFT) and Meta Platforms.
The combined market value of these five biggest tech companies is $1.9tn higher on the year - representing an impressive gain of 31%.
This reversal in fortune comes after a difficult period last year when rising interest rates led to flight from high-growth companies while pressure on Big Tech’s core markets weighed heavily on its performance causing many firms to make sweeping job cuts.
Tesla (NASDAQ:TSLA) has also been hurting short sellers, with its stock up 33% this year.
Meanwhile, shares in Meta Platforms have nearly doubled despite short bets hitting a recent peak of 0.6% of the company's shares.
While most high-growth stocks that led pandemic-era tech rally remain far below their peaks, a narrower tech rebound has set in at biggest, most profitable companies. Another example is in semiconductor stocks, with hedge funds that that shorted semiconductor stocks having lost $8bn so far this year.