Key Takeaways
- • Hedge funds cut 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 largest percentage decline in Goldman's records dating to 2016.
- • Information technology led net selling by a wide margin, with semiconductor stocks posting the largest dollar losses, even as technology still accounts for 23.5% of hedge funds' net global allocations, a 90th-percentile level over the past five years.
- • Global fundamental long-short funds lost 2.9% in the week to October 15 and lost money every day that week, though the strategy remains up 14.3% for the year, per Reuters citing Goldman notes.
- • Asia-focused stock pickers lost 6.8% in the first half of October, giving back more than half their gains from a late-June peak, as South Korea's Kospi fell 8% to a six-month low on October 15.
- • 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 2025, a threshold breached three times in 2026 (February 4, July 28 and October 15).
Summary
Hedge funds sharply reduced their technology stock holdings in 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, and coincided with a 5.5% drop in the Nasdaq 100 the prior week, its worst weekly performance since April 2025. Goldman described the pullback as a broad retreat from the AI trade, 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. Technology was also the worst-performing sector in the MSCI World Index over the same period. Gross trading activity among hedge funds fell at the fastest rate in almost three months, which Goldman interpreted as managers reducing overall risk rather than rotating between positions. Despite the selling, technology still represented 23.5% of hedge funds' net global allocations, a level in the 90th percentile of the past five years. Goldman also noted that global AI stocks had been net sold by long-short managers for six straight sessions, with long sales outpacing short covering.
Stock pickers posted notable losses. Global fundamental long-short funds lost 2.9% in the week to October 15 and lost money every day of that week, according to Reuters citing Goldman notes, though the strategy remains up 14.3% for the year. Asia-focused stock pickers were hit hardest, losing 6.8% in the first half of October and surrendering more than half of their gains from a late-June peak when they were up more than 40% for the year. South Korea's Kospi fell 8% to a six-month low on October 15, while Taiwan's market dropped more than 3%. Goldman further 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 threshold has now been breached three times in 2026, on February 4, July 28 and October 15.
The selloff extended into AI infrastructure credit. CoreWeave shares fell 15% on October 14 amid concerns about the company's debt, and yields on its bonds rose above 15%. Bruno Schneller, managing partner at Erlen Capital Management, told Reuters: "What we saw was less a fundamental rejection of AI and more a classic, high-velocity unwind of a crowded trade."
Information technology led net selling by a wide margin, and semiconductor stocks produced the largest losses in dollar terms. Technology was also the worst-performing sector in the MSCI World Index over the same period. Gross trading activity among hedge funds fell at the fastest rate in almost three months, which Goldman interpreted as managers reducing overall risk rather than rotating between positions. Despite the selling, technology still represented 23.5% of hedge funds' net global allocations, a level in the 90th percentile of the past five years. Goldman also noted that global AI stocks had been net sold by long-short managers for six straight sessions, with long sales outpacing short covering.
Stock pickers posted notable losses. Global fundamental long-short funds lost 2.9% in the week to October 15 and lost money every day of that week, according to Reuters citing Goldman notes, though the strategy remains up 14.3% for the year. Asia-focused stock pickers were hit hardest, losing 6.8% in the first half of October and surrendering more than half of their gains from a late-June peak when they were up more than 40% for the year. South Korea's Kospi fell 8% to a six-month low on October 15, while Taiwan's market dropped more than 3%. Goldman further 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 threshold has now been breached three times in 2026, on February 4, July 28 and October 15.
The selloff extended into AI infrastructure credit. CoreWeave shares fell 15% on October 14 amid concerns about the company's debt, and yields on its bonds rose above 15%. Bruno Schneller, managing partner at Erlen Capital Management, told Reuters: "What we saw was less a fundamental rejection of AI and more a classic, high-velocity unwind of a crowded trade."
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