Hedge funds have been unloading tech stocks at their fastest pace in six months, marking the largest tech-sector exodus in five years, according to a Goldman Sachs note released Friday and seen by Reuters on Monday. The move comes just ahead of the April 2 tariff deadline announced by U.S. President Donald Trump, which has sparked widespread market uncertainty and fears of an economic downturn.
According to Goldman Sachs’ prime brokerage desk — which tracks hedge fund activity — the information technology sector, including the “Magnificent-7” tech stocks, was “by far the most net sold” last week. Both long positions (bets that prices will rise) and short positions (bets on a decline) in tech stocks were rapidly closed, reflecting a strong pullback across the board.
Analysts at Edmond de Rothschild linked this abrupt sell-off to the anticipated tariffs on copper and other raw materials, which are expected to weigh heavily on tech manufacturers and AI-related hardware producers.
A separate note from Morgan Stanley revealed that hedge funds are increasingly betting against some of the sector’s biggest names. Nvidia, AMD, and Tesla were identified as the top three short positions as of Wednesday.
Goldman said that around 75% of last week’s hedge fund selling activity was concentrated in U.S. tech stocks, particularly those connected to AI hardware development. Total hedge fund exposure to tech is now at a five-year low, despite heavy buying just a few weeks ago in mid-March.
Another dataset from JPMorgan noted a reversal of positions by hedge funds last week, possibly influenced by strong retail investor activity. This surge in retail buying may have triggered a short squeeze, forcing some bearish investors to unwind their positions as stock prices climbed unexpectedly.
“With the tariff news, it was interesting that hedge fund flows and positioning might suggest they’re already somewhat prepared—at least in terms of key areas that have been in focus,” said JPMorgan in its client note.
As the April 2 deadline looms, hedge funds appear to be bracing for volatility, shifting away from one of the market’s most lucrative sectors in recent years.