Hedge funds reduced their technology sector exposure at the fastest pace in at least a decade between October 10 and October 15, 2026. Data from Goldman Sachs prime brokerage indicates this is the largest proportional reduction in tech positions since the firm began tracking this data in 2016.
The sell-off primarily targeted AI-linked companies, with semiconductor stocks experiencing the most significant decline in dollar terms. This liquidation effectively reversed all net buying of global AI stocks that hedge funds had accumulated since early 2025.
The Nasdaq 100 index fell by 5.5% during the week ending October 15, 2026, marking its worst weekly performance since April 2025. Goldman Sachs characterizes this activity as long liquidation rather than new short selling, reflecting a broader reduction in gross trading activity.
By mid-October, net leverage across hedge fund strategies reached a one-year low of 48.6%. Despite the rapid retreat, technology still accounts for 23.5% of global prime brokerage exposure, placing current positioning in the 90th percentile over the last five years.
Fundamental long-short hedge funds lost an average of 2.9% for the week. Asia-focused managers were particularly affected, recording a 6.8% decline in early October, largely due to their significant concentration in chipmakers and hardware suppliers within the AI supply chain.
