AI in action · Markets
Hedge Funds Undid Nearly Two Years of AI Buying in Five Days, Goldman's Prime Desk Says
Goldman Sachs prime brokerage data cited by Reuters show long-short hedge funds sold global AI stocks for five straight sessions from October 8 to 14, 2026, reversing all their net purchases since the start of 2025. The funds lost 2.9% in the week to October 15; Asia-focused managers lost 6.8% in the first half of the month.
The clearest account of who sold AI stocks this week came from the bank that lends them the money. Goldman Sachs's prime brokerage unit, in a note reported by Reuters and Hedgeweek, said global fundamental long-short hedge funds lost money every single day of the week to October 15, 2026, 2.9% in total, as they unwound positions in semiconductor and AI supply-chain stocks. The funds remain up 14.3% for the year.
The selling was large by the bank's own measures. Long-short managers net sold global AI stocks for five consecutive sessions from October 8 to 14, which, by Goldman's count, reversed all of their net buying since the beginning of 2025. One of those days was the second-largest single-day net sale of AI stocks in the past year. The ratio of long selling to short selling was about 3.5 to 1: funds were cutting what they owned, not betting against it. Eight of eleven US sectors were net sold, led by information technology and industrials.
Asia felt it most. Asia-focused stock pickers lost 6.8% in the first half of October, according to the note, as South Korea's Kospi fell 8% to a six-month low on Thursday and Taiwan's market lost more than 3%. The two countries' markets are dominated by memory and chip makers, which had been the most crowded expression of the AI trade outside the United States.
Goldman's Vincent Lin is quoted as saying the deleveraging looks closer to its beginning than its end, and the positioning data support that reading: even after the selling, hedge funds' long exposure to global AI stocks sat in the 83rd percentile of the past three years and leverage in the prime book remained near five-year extremes. The bank noted that this was the third such losing streak of 2026, after February 4 and July 28.
The note is a reminder of how an AI story becomes a markets story. The technology did not change in the week to October 15; TSMC reported a record quarter on the Thursday. What changed was that the investors who had bought the trade with borrowed money began, in unison, to sell it. Hedge-fund positioning is one of the few things in this market that can be measured, and for AI stocks it still reads as crowded.
Sources: Reuters (via Investing.com) — AI selloff hammers hedge funds this week, Asia managers lead losses (Oct 16, 2026); Hedgeweek — Hedge funds hit by AI sell-off as Asia-focused managers lead losses; Seeking Alpha — Investors have reversed all global AI net buying since 2025: Goldman Sachs prime book