Hedge Funds Erase All 2025 AI Stock Purchases in Five-Day Selloff

Over five consecutive trading days in October, hedge funds offloaded AI-related equities. By the end of that stretch, they had reversed every artificial intelligence stock purchase made since the beginning of 2025, based on Goldman Sachs data.

According to Morgan Stanley, hedge funds have reduced their overall equity exposure by more than 8% since June — the steepest pullback since at least 2017. The impact showed in share prices, with major technology firms tumbling last week and shedding $2 trillion in market value.

The damage was concentrated in one segment of the market. The S&P 500 remained largely flat through late October. Memory chip producers such as Samsung, SK Hynix, Micron, and SanDisk collectively lost over $700 billion in less than two weeks.

Why Hedge Funds Ran From AI Stocks

Hedge funds use borrowed capital to magnify their positions. When asset prices drop, losses accelerate, prompting funds to sell in order to reduce risk. That selling pushes prices lower and triggers further divestments.

The majority were heading for the exits rather than positioning for a downturn. On the most active day, they disposed of long positions roughly 3.5 times faster than they initiated new short bets, Goldman figures indicate.

🚨HUGE: Goldman data shows hedge funds wiped out ALL their AI buying since 2025 in just 5 days.

The bank's prime brokerage desk saw them net sell global AI stocks for five straight sessions, reversing all their AI buying since the start of 2025.

They also sold about $20 BILLION…

— Coin Bureau (@coinbureau) November 1, 2026

Then came October 22. Goldman Sachs’ basket of hedge funds’ preferred equities fell 4.2%, the worst single-day drop since 2011. The bank’s prime brokerage desk captured the mood succinctly.

“If last Thursday felt bad, today has been worse,”

Is the AI Bubble Bursting, or Are Funds Just Selling?

Macro investor Jordi Visser attributes the selloff to leverage, not weakening fundamentals. He estimates that the leveraged positions took 18 months to build and 75 days to unwind.

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On many measures this is one of the largest hedge fund equity deleveraging events in the last 30 years without economic deleveraging.

For equities…

— Jordi Visser (@jvisserlabs) October 25, 2026

Corporate earnings have risen roughly 20%, and demand for AI computing continues to outstrip supply. SK Hynix anticipates a memory shortage through 2030. Fundstrat’s Tom Lee believes a single forced seller may have triggered the decline.

Goldman Sachs paints a bleaker picture. The bank stated that the deleveraging appears nearer its beginning than its end, according to Deep News. Current AI holdings by funds remain in the top 17% of the past three years.

On October 26, BeInCrypto asked whether China’s AI bubble bursting would spread to the United States. Several days later, a late-October selloff erased roughly $2 trillion from the Nasdaq-100.

If Goldman Sachs is correct, hedge funds still have considerable positions left to sell.