Hedge Funds Cut Tech Stocks at Fastest Pace in Decade, Goldman Sachs Says
Key Summary
Hedge funds have reduced their technology stock holdings at the fastest pace in at least a decade, according to Goldman Sachs prime brokerage data. The selling coincided with a 5.5% drop in the Nasdaq 100 last week, the index's worst weekly performance since April 2025. Technology accounts for 23.5% of hedge funds' net global allocations, a level in the 90th percentile of the past five years.
Precedent & Market Context
Hedge funds experienced their worst day since August as AI stock selloff deepened in 2026. Quant strategies logged their weakest performance since August 2026. The selling was concentrated in AI-linked stocks, driven by unexpected US inflation data. Global markets also suffered, with the Nasdaq Composite and S&P 500 falling 1.9% and 1.1%, respectively. Asia-focused managers have already given back more than half their gains since late June.
Main Event
Hedge funds cut their technology stock holdings at the fastest pace in at least a decade over the five trading sessions through October 15, according to Goldman Sachs prime brokerage data reported by Bloomberg. The reduction was the largest percentage decline in Goldman's records, which date back to 2016. The selling coincided with a 5.5% drop in the Nasdaq 100 last week, the index's worst weekly performance since April 2025.
Analysis & Market Impact
The data points to a broad pullback from the AI trade by professional investors, after hedge funds had built heavy exposure to chipmakers and other AI-linked stocks. Information technology led net selling by a wide margin, and semiconductor stocks produced the largest losses in dollar terms, according to Goldman. Technology was also the worst-performing sector in the MSCI World Index over the same period.
Implications & Outlook
Goldman said global AI stocks had been net sold by long-short managers for six straight sessions, with long sales outpacing short covering. The bank also noted that fundamental long-short, systematic long-short and multi-strategy funds had never all fallen more than 80 basis points on the same day from the Covid period through the end of 2025. That has now happened three times in 2026: on February 4, July 28 and October 15.
- Technology accounts for 23.5% of hedge funds' net global allocations, a level in the 90th percentile of the past five years.