Hedge funds sold off all AI positions accumulated since the start of 2025 in a week

Institutional investors are demonstrating high speed in selling off assets in the artificial intelligence sector. According to data from Goldman Sachs' prime brokerage division, hedge funds completely sold off positions acquired since the beginning of 2025 in five trading days. This means that nearly two years of systematic purchases were negated in a single week.

Mass capital outflow from the technology sector

For five consecutive sessions, funds were net sellers of AI-related stocks. In total, approximately $20 billion exited technology stocks over two weeks. Analysts note that investors predominantly closed long positions, which were 3.5 times larger than new short bets. This indicates an intention to exit the market quickly rather than speculation on a decline.

A similar picture is confirmed by Morgan Stanley. The share of stocks in hedge fund portfolios decreased by approximately 7.8%, which is the sharpest drop in the firm's data since 2016. The decline was particularly steep on 22 October, when the index of hedge funds' favourite stocks, tracked by Goldman, lost 4.2% in a single day. A worse one-day result had only been recorded in 2011.

Blow to semiconductor manufacturers

The largest losses were sustained by companies producing memory components. Samsung, SK Hynix, Micron, and SanDisk lost a combined total of over $700 billion in market capitalization in less than two weeks. Chip prices fell by 15.6% in October, while the broad S&P 500 index declined by less than 1% over the same period.

Geopolitical factor and market reaction

While funds were exiting AI instruments, market attention was diverted to the Middle East. On 1 November, investors reacted to information about a possible US-Iran war cessation agreement project, which caused oil prices to fall by approximately 7% in a day. However, the next day The Wall Street Journal reported that US forces had struck the Iranian island of Qeshm, and also revealed that Washington had secretly carried out limited strikes for several weeks. Following these publications, oil prices began to rise again.

Currently, major market players are focused on one action — reducing risk. The impact of this strategy on oil and Bitcoin prices will be examined in the next part of the analysis.

Main conclusion: big money does not panic, it simply exits the market first.