Here's the 1 Stock Hedge Funds Are Buying Hand Over Fist

By Dave Kovaleski – Feb 25, 2026 at 6:25AM ESTKey PointsAmazon was the stock most held by hedge fund managers in January, according to the Hazeltree Crowdedness Report.Shares of Amazon have been trading at a reasonable valuation.Microsoft and Nvidia were Nos. 2 and 3 on the list.These 10 Stocks Could Mint the Next Wave of Millionaires ›NASDAQ: AMZNAmazonMarket Cap$2.2TToday's Changeangle-down(1.59%) $3.27Current Price$208.54Price as of February 24, 2026 at 3:58 PM ETHere's why hedge funds are bullish on these tech giants.In January, hedge funds and institutional investors were buying one stock more than any other -- Amazon (AMZN +1.59%). The cloud computing and e-commerce giant ranked as the large-cap stock that most hedge funds owned in January. That's according to the monthly Hazeltree Crowdedness Report, which tracks the stocks owned by the 600-plus hedge funds it covers. Crowdedness simply refers to how many hedge funds own it. Hazeltree, which provides treasury and liquidity management software for the alternative investment industry, calculates a crowdedness score for each stock by sector and region, using its own methodology. Image source: Getty Images. In January, Amazon had a long crowdedness score of 99, which essentially means its was owned in the most portfolios. Microsoft (MSFT +1.23%) was second in North America with a score of 82, followed by Nvidia (NVDA +0.79%) with a crowdedness score of 80. Meta Platforms was fourth with a score of 72, while Broadcom was fifth at 68. Why hedge funds are buying Amazon The January Hazeltree report shows that institutional investors are looking to take advantage of the tech sell-off that occurred in the latter part of 2025 and into 2026. Amazon, for example, is down almost 20% from its October highs and is trading at a reasonable valuation, roughly 28 times forward earnings. The stock price is down about $11 year to date and that is primarily over concerns about the massive $200 billion it plans to spend on capital expenditures this year -- roughly 50% more than it spent last year. ExpandNASDAQ: AMZNAmazonToday's Change(1.59%) $3.27Current Price$208.54Key Data PointsMarket Cap$2.2TDay's Range$203.25 - $210.3652wk Range$161.38 - $258.60Volume4.2KAvg Vol47MGross Margin50.29% Many investors viewed this as a negative, fearing that Amazon was spending too much on AI infrastructure with uncertain return on investment. After all, Amazon Web Services has been losing market share to both Microsoft and Alphabet. But it appears that most hedge fund managers see this is as a long-term positive; that Amazon will need to step up its AI infrastructure and capabilities to maintain its lead and keep its rivals at bay. Some 92% of Wall Street analysts rate Amazon as a buy, with the other 8% saying it's a hold. It had a median price target of $285 per share, which would be about a 39% return over the next 12 months. This shows that Wall Street is also bullish on Amazon. Microsoft and Nvidia are also in the buy zone The same can be said for both Microsoft and Nvidia, the second- and third-most invested-in stocks by hedge funds. Microsoft's forward P/E ratio dropped to 30 at the end of 2025, prompting investors to buy at a lower valuation. It has continued to decline, down some 20% year to date. Wall Street analysts see it as a screaming buy, with 92% saying buy. It has a $600-per-share median price target, suggesting 55% upside. ExpandNASDAQ: MSFTMicrosoftToday's Change(1.23%) $4.72Current Price$389.19Key Data PointsMarket Cap$2.9TDay's Range$381.77 - $389.3452wk Range$344.79 - $555.45Volume4.7KAvg Vol31MGross Margin68.59%Dividend Yield0.89% Nvidia's P/E ratio is still high at 55, but its forward P/E is just 29 and its long-term five-year PEG ratio is just 1, making it a good long-term value based on future earnings expectations. Investors should do their own research and not take the word of hedge funds and analysts, but Amazon, along with Microsoft and Nvidia, should be on your radar.Read NextFeb 25, 2026 •By Neil PatelWhat to Know Before Buying Amazon Stock in 2026Feb 23, 2026 •By Leo SunThese 2 Retail Stocks Are Soaring After SCOTUS Strikes Down President Trump's TariffsFeb 23, 2026 •By Daniel SparksAs Stocks Slide, Here's 1 to Consider BuyingFeb 22, 2026 •By Jennifer SaibilCould Amazon Stock Gain 79% This Year? 1 Wall Street Analyst Thinks So.Feb 22, 2026 •By James Brumley3 Stocks to Buy and Hold Forever: A Long-Term Play for Your PortfolioFeb 22, 2026 •By Adam LevyWalmart vs. Amazon: Which Trillion-Dollar Stock Is a Better Buy Right Now?About the AuthorDave mainly covers financials, consumer goods, and technology stocks and ETFs. He wrote for the Fool from 2019-2023 and rejoined the Fool in 2026. In the past he's covered mutual funds and institutional investments for Pensions & Investments, personal finance for S&P, money markets and bonds for Crane Data, and stocks for ValueWalk.TMFdkovaleskiStocks MentionedAmazonNASDAQ: AMZN$208.54 (+1.59%) $+3.27MicrosoftNASDAQ: MSFT$389.19 (+1.23%) $+4.72NvidiaNASDAQ: NVDA$193.06 (+0.79%) $+1.51Meta PlatformsNASDAQ: META$639.20 (+0.31%) $+1.95AlphabetNASDAQ: GOOGL$310.96 (0.17%) $0.53BroadcomNASDAQ: AVGO$325.45 (1.48%) $4.89AlphabetNASDAQ: GOOG$310.92 (0.25%) $0.77*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.