Hedge Funds Sell Tech at Near-Record Pace as AI Trade Faces Reassessment

Hedge funds sold technology stocks at a near-record pace last week as rising uncertainty about the outlook for data-center construction following the U.S. midterm elections fueled a reassessment of the artificial intelligence trade.

Technology was the most net-sold sector globally and in the United States. The net-selling ratio was roughly in line with its highest level in records dating back to 2016.

U.S. fundamental long-short hedge funds also cut leverage sharply, a separate sign of lower risk appetite. Gross leverage fell 8.7 percentage points to 207.5%, the largest weekly decline since March 2020. Net leverage fell 3.7 percentage points to 43.3%, its steepest weekly decline since April 2025.

An earlier hedge-fund technology retreat also set a record against data going back to 2016, even as leveraged equity ETFs drew $9.5 billion. During that five-session stretch, chip and chip-equipment stocks made up 57% of hedge funds’ net sales in U.S. technology shares.