Key Points
- Systematic hedge funds recorded their worst weekly performance since 2024.
- Goldman Sachs says the scale of selling off tech stocks in the past two weeks reached $20 billion.
- Nahui fell by 5.5%, concerns about AI financing spread.
As the Nasdaq 100 index fell by 5.5%, hedge funds suffered their most severe one-week setback in two years; Goldman Sachs identified approximately $20 billion in sales of tech stocks over the past two weeks.
According to a Goldman Sachs report viewed by Reuters on October 26, systematic long-short hedge funds fell 2% last week, recording their worst weekly performance since 2024. Fundamental long-short strategies also declined by 1.1%, indicating that the latest round of selling related to artificial intelligence is no longer limited to ordinary tech investors.
The Nasdaq 100 index fell 5.5% this week, marking the largest single-week decline since April 2025. Prior to this, the semiconductor sector had already experienced a wave of selling off, which resulted in a total loss of about $1.64 trillion in market value for major chip manufacturers over six trading days.
Goldman Sachs says the scale of selling off tech stocks reached $20 billion
Goldman Sachs' principal brokerage business records show that in the past two weeks, approximately $20 billion worth of tech stocks were sold, close to the $23 billion in liquidations recorded in July.
The report also stated that the decrease in total exposure to a single stock reached its largest level since the end of July. U.S. stocks saw net selling for the third consecutive week, and net selling occurred in four out of the previous five weeks.
This round of selling adds an institutional explanation to the pullback of AI stock. The market is increasingly concerned about borrowing costs, excessive valuations, and the profitability of large-scale infrastructure investments.
Trend-following funds are particularly vulnerable when existing market patterns suddenly reverse. When technology stocks, which have previously performed strongly, fall, algorithmic strategies may be forced to reduce their positions, thereby further exacerbating market volatility.
Fundamental long-short funds are also under pressure. Such strategies have fallen by 3.8% so far in October, but have still risen by 8.8% so far in 2026; systematic strategies have fallen by 1.1% this month, but have still risen by 18.7% since the beginning of the year.
These data indicate that the market is undergoing a painful reallocation of positions, rather than the disappearance of the previous gains made by hedge funds.
Meta falls 10% revealing concerns about AI's financing
Meta has become one of the most evident cases of a shift in Wall Street's attitude.
Despite strong financial report performance, the company's stock price still fell by about 10% this week due to the company's statement that it needs additional capital to support its infrastructure expansion.
This reaction highlights an increasingly apparent contradiction: companies can report considerable revenue growth, but investors are becoming more and more concerned about the financing costs of future expansion.
These issues are particularly important for AI infrastructure companies, as the massive demand for computing power must be balanced with borrowing costs, equipment depreciation, and construction expenses.
Previously, CoreWeave faced pressure on its borrowing costs, which demonstrated how concerns about financing quickly spread from the bond market to stock valuations.
At the same time, the outflow of funds from technology funds indicates that, despite the ongoing demand for a broader range of stocks, some investors are shifting their positions away from this sector.
