Hedge funds have been heading for the exits on tech, and they are not walking. According to Goldman Sachs prime brokerage data, funds cut their technology exposure at the fastest rate in at least ten years.
The selling ran from October 10 to October 15, 2026. Goldman’s records go back to 2016, and no stretch in that dataset saw a larger proportional cut to tech positions.
What the Goldman data shows
The selling was not spread evenly across the sector. Funds focused their exits on AI-linked names, with semiconductors taking the biggest hit in dollar terms.
The scale was striking. Goldman’s data indicates that global AI stocks reversed every bit of net buying hedge funds had done since early 2025.
The broader market felt it. The Nasdaq 100 fell 5.5% in the week ending October 15, 2026, its worst weekly showing since April 2025. Global tech shares slid sharply alongside it.
Goldman characterized the activity primarily as long liquidation, not a wave of fresh short bets. A short seller is betting a stock will fall. A fund liquidating longs is simply getting out of positions it already held.
The retreat also lined up with a wider drop in gross trading activity. Gross exposure measures how much capital funds have deployed on both the long and short sides combined, so a decline signals managers are pulling back overall, not just rotating between bets.
Leverage falls, but tech still dominates
Net leverage across hedge fund strategies dropped to a one-year low of 48.6% by mid-October.
Even after the fastest tech retreat in Goldman’s records, technology still made up 23.5% of global prime brokerage exposure. That share puts hedge fund tech positioning in the 90th percentile over the last five years.
Fundamental long-short hedge funds, which pick individual stocks to buy and sell based on company analysis, lost an average of 2.9% for the week.
Asia-focused managers had it worse. They saw a 6.8% decline in early October, the steepest among the groups tracked. Given how central Asian chipmakers and hardware suppliers are to the AI supply chain, heavy semiconductor selling would naturally land hard in that region’s portfolios.
How the AI trade got here
Hedge funds had been steadily adding AI exposure since early 2025, building positions across chipmakers and other companies tied to the technology’s buildout. When a trade becomes this crowded, exits tend to be fast and correlated. Many funds holding the same names means many funds trying to sell those names at roughly the same time.
The Nasdaq 100’s last comparable weekly drop came in April 2025. The index has now matched that stress point roughly a year and a half later, this time with hedge fund deleveraging as a central driver.
What this means for markets
A one-year low in net leverage suggests managers are prioritizing risk control over chasing upside.
The research behind the Goldman findings suggests this could point to a broader cooling in tech, particularly in AI-related investments. It also flags a possible shift toward defensive sectors like healthcare and consumer staples, which hedge funds have reportedly begun favoring in recent rotations.
Tech still accounts for 23.5% of prime brokerage exposure, sitting in the 90th percentile of the past five years. The research notes that continued unwinding might keep downward pressure on tech stocks in the interim.
Asia-focused funds deserve attention as well. Their 6.8% drawdown shows how concentrated chip exposure can amplify losses in a selloff of this kind.
Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.