US Hedge Funds Sell All AI Shares Bought Since 2025
| Source: Mastodon | Original article
U.S. hedge funds have liquidated all AI equities purchased since 2025, amid a broader tech sell‑off triggered by banks withdrawing credit from AI firms.
US hedge funds have erased every AI‑related position they built since the start of 2025, selling the stocks over five consecutive trading days in October, according to data from Goldman Sachs. The unwind trimmed more than 8 % of their overall tech exposure since June – the steepest reduction in the sector since 2017 – and accounted for roughly $20 billion of technology shares sold in just two weeks.
The rapid sell‑off coincided with a broader tumble in U.S. tech equities after banks withdrew credit lines from AI firms last month. Goldman’s analysis links the hedge‑fund activity to a need to lower leverage, which had peaked at about 310 %, rather than a fundamental bet against AI. Nevertheless, the trades triggered a roughly $2 trillion drop in market value for AI stocks and helped push the Nasdaq‑100 into correction territory, even as AI holdings remain near the 90th‑percentile of fund portfolios.
Why it matters is twofold. First, the scale of the reversal underscores how tightly leveraged hedge funds have become on AI hype, making the sector vulnerable to liquidity shocks. Second, the sell‑off could tighten financing conditions for AI companies at a moment when firms such as Oracle are seeking fresh capital for AI build‑outs and startups like Anthropic are navigating valuation pressures.
Investors should watch whether the leverage unwind continues. Further reductions could deepen the correction, especially if credit constraints tighten again. Conversely, any sign that hedge funds stabilize their exposure – for example, by re‑entering positions on improved fundamentals – would signal renewed confidence in the AI rally. The next few weeks will reveal whether the current pull‑back is a temporary balance‑sheet fix or the start of a longer‑term shift in capital allocation to the AI sector.
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