(Bloomberg) -- Hedge funds have cut holdings in megacap technology stocks while betting on a broader array of firms that will benefit from artificial intelligence, according to Goldman Sachs Group Inc. strategists.

Funds trimmed net positions in Nvidia Corp., Google parent Alphabet Inc., Amazon.com Inc., Microsoft Corp. and Facebook owner Meta Platforms Inc. in the first quarter, although they added to Apple Inc., strategist Ben Snider wrote in a note dated May 21.

“Among the various phases of the AI trade, firms exposed to AI infrastructure investment have recently performed best and captured the most interest in our client conversations,” Snider said.

The buzz around AI has lifted the S&P 500 Index to record highs this year. The frenzy had so far been concentrated in the biggest tech stocks, but as valuations become more expensive, investors are switching to sectors that will either power AI adaption or show productivity benefits.

In the first quarter, AI infrastructure-related stocks including chipmaker Marvell Technology Inc., technology supply-chain services company TD Synnex Corp., electric utility AES Corp. and Littelfuse Inc., a maker of circuit-protection devices, showed the largest increase in popularity, Snider said.

Still, the biggest technology companies, excluding Tesla Inc., remained the most popular long positions in the bank’s hedge funds VIP list, the strategist said. His team’s analysis covered 707 hedge funds with $2.7 trillion of gross equity positions at the beginning of April.

--With assistance from Natalia Kniazhevich.

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