- The AI trade got a fast reassessment. Hedge funds sold global technology stocks at one of the fastest paces on record last week, as concerns that political opposition could derail the data-center buildout hit the AI trade, according to Goldman Sachs prime brokerage data as of Nov. 6 cited by Bloomberg.
- Tech was the most-sold sector by far. Technology was the most heavily net-sold sector globally and in the U.S., roughly matching the record in Goldman data going back to 2016, and the selling triggered the biggest wave of single-stock net selling in four months.
- Industrials were hit too. Hedge funds unloaded U.S. industrial stocks at the fastest pace since April 2020, as investors cut risk after the U.S. midterm elections raised questions about the pace of data-center development and demand for semiconductors and other infrastructure.
- Leverage fell sharply. Gross leverage of U.S. fundamental long-short funds fell 8.7 percentage points to 207.5%, the largest weekly decline since March 2020, while net leverage dropped 3.7 points to 43.3%, the largest weekly decline since the “Liberation Day” week in April 2025.
What Happened?
The selling came in the week after the midterms, when worries that the election outcome could slow data-center construction prompted an aggressive reassessment of AI-related positions. By our calculation, gross leverage stood near 216.2% and net leverage near 47.0% before the week’s cuts. There were signs of stabilization late in the week: hedge funds were net buyers overall in Goldman’s equity trading desk data, driven mainly by Friday’s buying, which largely covered macro positions such as indexes and exchange-traded funds.
Why It Matters?
Positioning matters for where the AI trade goes next. With gross leverage falling at its fastest weekly rate since the pandemic crash and single-stock selling at a four-month high, hedge funds have taken a meaningful amount of risk off the table in technology and industrials, the two sectors most tied to the data-center buildout. That de-risking can amplify price moves on the way down, but it also means less forced selling is left if sentiment turns, and Friday’s buying in index and ETF positions suggests some managers were already covering hedges.
What’s Next?
Watch whether the late-week stabilization holds and whether hedge funds return to single stocks in tech or keep trading through index and ETF products. Any further political signals on the pace of data-center development and demand for semiconductors and other infrastructure are likely to drive the next round of positioning changes.
Affected Tickers and Coins: XLK, XLI, QQQ, GS
Source: Bloomberg
