Hedge funds reduced 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. Prime brokerage flow data captures trading across the bank's hedge fund clients and is closely followed as a gauge of institutional positioning.

The reduction marked the largest percentage decline in Goldman's records, which extend back to 2016. The selling coincided with a 5.5% weekly drop in the Nasdaq 100 — a benchmark dominated by large technology and AI-linked companies — the index's worst weekly performance since April 2025.

The figures point to a broad pullback from the AI trade by professional investors, following a period in which hedge funds had built heavy exposure to chipmakers and other AI-linked stocks. Whether the de-risking extended into the following week will become clearer with upcoming prime brokerage flow readings.

Semiconductors Lead the Selling

Information technology led net selling by a wide margin, and semiconductor stocks generated 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.

Gross trading activity among hedge funds fell at the fastest rate in almost three months, a signal that managers were reducing overall risk rather than simply rotating between positions. Even after the selloff, technology still accounts for 23.5% of hedge funds' net global allocations — a level in the 90th percentile of the past five years, Goldman said, leaving exposure historically elevated even after the reduction.

Stock Pickers Post Daily Losses

The retreat capped a difficult week for equity hedge funds. Global fundamental long-short funds lost 2.9% in the week to October 15 and lost money every single day of that week, Reuters reported, citing Goldman notes. 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%. Both markets are dominated by semiconductor and hardware suppliers — the segment Goldman identified as generating the largest dollar losses.

Goldman said global AI stocks had been net sold by long-short managers for six consecutive sessions, with sales of long positions 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 occurred three times in 2026, on February 4, July 28 and October 15 — a breadth of losses spanning fund styles rather than a single strategy.

A Crowded Trade Unwinds

The selloff extended to AI infrastructure credit. CoreWeave — an AI cloud-computing provider whose rapid buildout has been financed in part with borrowed money — fell 15% on October 14 amid concerns about the company's debt, and yields on its bonds rose above 15%, reflecting the higher compensation investors now demand to hold the debt.

"What we saw was less a fundamental rejection of AI and more a classic, high-velocity unwind of a crowded trade," Bruno Schneller, managing partner at Erlen Capital Management, told Reuters.