Hedge Funds Dump $20 Billion in Tech Stocks, Erasing Their AI Buying Since 2025
Hedge funds have sold roughly $20 billion in technology stocks over two weeks, wiping out all of their net purchases of AI-related shares since the start of 2025 in just five trading sessions, Hedgeweek reported, citing Goldman Sachs prime brokerage data.
That pace approaches the $23 billion sold during a major unwind in July.
Funds sold existing long positions at 3.5 times the rate they opened new short bets, a sign managers were cutting exposure rather than betting outright against the sector.
Goldman’s basket of stocks favored by hedge funds fell 4.2% on Oct. 22, its steepest one-day drop since 2011. Separate Morgan Stanley data showed hedge funds cut overall exposure by about 7.8%, the most since that series began in 2016.
Chipmakers tied to AI took the hardest hit. Samsung Electronics, SK Hynix, Micron and SanDisk together lost more than $700 billion in market value in under two weeks.
Semiconductor shares fell 15.6% in October, compared with a drop of less than 1% for the S&P 500, as investors questioned whether huge AI spending would turn into lasting profits.
Hedge funds have not abandoned the sector. Technology still makes up 23.5% of Goldman’s global prime brokerage book, in the 90th percentile of the past five years.
Worst Week in Two Years
The selling hit fund returns. Systematic long/short hedge funds fell about 2% in the week ending Oct. 23, their worst week since 2024, according to a Goldman note reported by HedgeCo.
Fundamental long/short strategies lost 1.1% that week and were down 3.8% for October, though still up 8.8% for the year. Systematic strategies remained up 18.7% for the year.
Single stocks saw their largest reduction in gross exposure since late July, and U.S. equities were net sold for a third straight week. Net leverage among fundamental long/short funds fell to 47%, the lowest in a year.
Tony Pasquariello, Goldman’s head of hedge fund coverage, wrote that hedge funds sold technology stocks on Oct. 22 at the fastest pace in two years, Bloomberg reported.
He said the S&P 500’s apparent calm over three months masked a “sustained performance drawdown” since the end of June as the AI trade retraced.
The pressure carried into the end of the month. The Nasdaq 100 lost about 6.5% in October, its worst month since March 2025, and Alphabet fell 12.6% last week, its sharpest weekly drop since 2008, Stocktwits reported.
“With long books at their smallest in a year, a sharp rebound could squeeze managers who sold their winners,” HedgeCo noted, while further AI weakness would test how much of this year’s gains funds can hold.
Intel added to the strain on chip stocks, plunging 24% last week after a weaker-than-expected fourth-quarter outlook.
Stock futures rose Monday ahead of earnings from Apple and Palantir after the close and AMD on Tuesday, reports that will offer a fresh read on demand for AI.
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