Goldman Sachs Logs Record Tech Selling as AI Investors Demand Revenue

Rich Privorotsky, Goldman Sachs’ head of European Equities Trading within FICC and Equities, said the bank’s prime-brokerage book logged a record technology-stock sell-off last week as investors demanded revenue from AI spending.

Podcast host Chris Hussey framed the crowded strategy of betting on AI while shorting everything else as unwinding. Privorotsky described concentrated positions in AI, semiconductor companies and hyperscalers, saying recent weeks had been painful for those consensus trades. Goldman Sachs also measured hedge funds’ sharpest proportional retreat from technology positions since 2016, a separate record in hedge-fund technology cuts.

The market expects AI capital spending to reach $1.1 trillion next year, Privorotsky said. He said investors want hyperscalers to show continued cloud growth and monetization, demonstrate that backlogs convert into revenue, and explain how quickly they can reach free-cash-flow break-even relative to expectations.

Privorotsky raised financing concerns about more leveraged parts of the AI trade, especially neoclouds. He also described a shift from a savings glut to a spending glut, linking AI investment and government deficits to changes in the cost of capital. Separately, he said high energy prices were lowering risk appetite.

Investors are concerned about both a shortage of computing capacity and the possibility of future excess capacity, Privorotsky said. Spot computing prices continue to rise and demand remains strong. He said some heavily sold electrification, civil aerospace and transportation assets have begun to look attractive.