diff --git a/crates/editor/src/element.rs b/crates/editor/src/element.rs
index d4cd126f32..1f324e3b2f 100644
--- a/crates/editor/src/element.rs
+++ b/crates/editor/src/element.rs
@@ -1238,8 +1238,8 @@ impl EditorElement {
                 hover_at(editor, Some(anchor), window, cx);
                 Self::update_visible_cursor(editor, point, position_map, window, cx);
             } else {
-                // Don't call hover_at with None when we're over an inlay
-                // The inlay hover is already handled by update_hovered_link
+                // When over an inlay or invalid position, clear any existing hover
+                hover_at(editor, None, window, cx);
             }
         } else {
             editor.hide_hovered_link(cx);
diff --git a/crates/editor/src/hover_links.rs b/crates/editor/src/hover_links.rs
index f355eb3564..6bfca303c2 100644
--- a/crates/editor/src/hover_links.rs
+++ b/crates/editor/src/hover_links.rs
@@ -303,12 +303,13 @@ pub fn update_inlay_link_and_hover_points(
     let hovered_offset = snapshot.display_point_to_inlay_offset(clipped_point, Bias::Left);
 
     let mut go_to_definition_updated = false;
+    let mut hover_updated = false;
 
     // Get all visible inlay hints
     let visible_hints = editor.visible_inlay_hints(cx);
 
     // Find if we're hovering over an inlay hint
-    let found_inlay = visible_hints.into_iter().find(|inlay| {
+    if let Some(hovered_inlay) = visible_hints.into_iter().find(|inlay| {
         // Only process hint inlays
         if !matches!(inlay.id, InlayId::Hint(_)) {
             return false;
@@ -319,9 +320,7 @@ pub fn update_inlay_link_and_hover_points(
         let inlay_end = InlayOffset(inlay_start.0 + inlay.text.len());
 
         hovered_offset >= inlay_start && hovered_offset < inlay_end
-    });
-
-    if let Some(hovered_inlay) = found_inlay {
+    }) {
         let inlay_hint_cache = editor.inlay_hint_cache();
         let excerpt_id = hovered_inlay.position.excerpt_id;
 
@@ -387,20 +386,18 @@ pub fn update_inlay_link_and_hover_points(
                                     window,
                                     cx,
                                 );
+                                hover_updated = true;
                             }
                         }
                         project::InlayHintLabel::LabelParts(label_parts) => {
-                            // Find which specific part is being hovered
-                            let hint_start =
+                            // VS Code shows hover for the meaningful part regardless of where you hover
+                            // Find the first part with actual hover information (tooltip or location)
+                            let _hint_start =
                                 snapshot.anchor_to_inlay_offset(hovered_inlay.position);
+                            let mut part_offset = 0;
 
-                            if let Some((part, part_range)) = hover_popover::find_hovered_hint_part(
-                                label_parts,
-                                hint_start,
-                                hovered_offset,
-                            ) {
-                                let part_offset = (part_range.start - hint_start).0;
-                                let part_len = (part_range.end - part_range.start).0;
+                            for part in label_parts {
+                                let part_len = part.value.chars().count();
 
                                 if part.tooltip.is_some() || part.location.is_some() {
                                     // Found the meaningful part - show hover for it
@@ -436,6 +433,7 @@ pub fn update_inlay_link_and_hover_points(
                                             window,
                                             cx,
                                         );
+                                        hover_updated = true;
                                     } else if let Some((_language_server_id, location)) =
                                         part.location.clone()
                                     {
@@ -460,8 +458,9 @@ pub fn update_inlay_link_and_hover_points(
                                             window,
                                             cx,
                                         );
+                                        hover_updated = true;
+
                                         // Now perform the "Go to Definition" flow to get hover documentation
-                                        // Prepare data needed for the async task
                                         if let Some(project) = editor.project.clone() {
                                             let highlight = highlight.clone();
                                             let hint_value = part.value.clone();
@@ -674,28 +673,27 @@ pub fn update_inlay_link_and_hover_points(
                                             );
                                         }
                                     }
+
+                                    // Found and processed the meaningful part
+                                    break;
                                 }
+
+                                part_offset += part_len;
                             }
                         }
                     };
                 }
             }
         }
-    } else {
-        // No inlay is being hovered, hide any existing inlay hover
-        if editor
-            .hover_state
-            .info_popovers
-            .iter()
-            .any(|popover| matches!(popover.symbol_range, RangeInEditor::Inlay(_)))
-        {
-            hover_popover::hide_hover(editor, cx);
-        }
     }
 
     if !go_to_definition_updated {
         editor.hide_hovered_link(cx)
     }
+    if !hover_updated {
+        hover_popover::hover_at(editor, None, window, cx);
+        editor.clear_background_highlights::<HoverState>(cx);
+    }
 }
 
 pub fn show_link_definition(
diff --git a/crates/editor/src/hover_popover.rs b/crates/editor/src/hover_popover.rs
index a3f3f7beaa..80eb56645e 100644
--- a/crates/editor/src/hover_popover.rs
+++ b/crates/editor/src/hover_popover.rs
@@ -193,12 +193,6 @@ pub fn hover_at_inlay(
                 };
 
                 this.update(cx, |this, cx| {
-                    // Check if we should still show this hover (haven't moved to different location)
-                    if this.hover_state.info_task.is_none() {
-                        // Task was cancelled, don't show the hover
-                        return;
-                    }
-
                     // Highlight the inlay using background highlighting
                     let highlight_range = inlay_hover.range.clone();
                     this.highlight_inlays::<HoverState>(
@@ -562,19 +556,16 @@ fn same_info_hover(editor: &Editor, snapshot: &EditorSnapshot, anchor: Anchor) -
         .info_popovers
         .iter()
         .any(|InfoPopover { symbol_range, .. }| {
-            match symbol_range {
-                RangeInEditor::Text(range) => {
+            symbol_range
+                .as_text_range()
+                .map(|range| {
                     let hover_range = range.to_offset(&snapshot.buffer_snapshot);
                     let offset = anchor.to_offset(&snapshot.buffer_snapshot);
                     // LSP returns a hover result for the end index of ranges that should be hovered, so we need to
                     // use an inclusive range here to check if we should dismiss the popover
                     (hover_range.start..=hover_range.end).contains(&offset)
-                }
-                RangeInEditor::Inlay(_) => {
-                    // If we have an inlay hover and we're checking a text position, they're not the same
-                    false
-                }
-            }
+                })
+                .unwrap_or(false)
         })
 }