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Hedge Funds Rapidly Exit Tech Stocks Ahead of U.S. Tariff Deadline, Goldman Sachs Reports

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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.

CoreWeave’s Nasdaq Debut Valued at $23 Billion Amid Market Volatility

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CoreWeave, an AI infrastructure company backed by Nvidia, made its muted debut on the Nasdaq on Friday, with shares closing flat after opening nearly 3% below its initial offer price. The debut gives the company a fully diluted valuation of $23 billion, but the lackluster performance has raised concerns about the broader market’s appetite for IPOs, especially amid tariff uncertainties and a turbulent equity market.

The stock opened at $39, below the IPO price of $40, and closed with little change. This followed a challenging pre-IPO process, where CoreWeave downsized its offering. The company is part of the AI infrastructure wave, providing access to data centers and Nvidia chips, which are in high demand for developing AI applications.

Despite these promising prospects, concerns about long-term growth and risks in a volatile market persist. CoreWeave’s heavy reliance on major clients like Microsoft, which accounts for a significant portion of its revenue, has drawn attention, especially with the uncertainty surrounding Big Tech’s AI investment strategies and competition from cheaper AI solutions like China’s DeepSeek.

CoreWeave’s IPO raised $1.5 billion, with Nvidia contributing a $250 million order. The company has secured a substantial contract with OpenAI, valued at $11.9 billion, to reduce customer concentration risks. However, CoreWeave faces challenges due to its capital intensity, debt load, and reliance on leased data centers.

Scale AI Eyes $25 Billion Valuation in Potential Tender Offer Amid AI Boom

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Scale AI, a rapidly growing artificial intelligence startup, is seeking a valuation as high as $25 billion in a potential tender offer, according to a report from Business Insider. The company, which has seen rising demand for AI services, aims to leverage the current AI boom, which has attracted significant attention from major tech players.

The startup, based in California, is in discussions regarding the terms of the tender offer, which could involve investors or the company purchasing shares from existing shareholders. However, the final valuation may change depending on negotiations.

Founded in 2016, Scale AI is already valued at nearly $14 billion, as per its last funding round. The company counts tech giants such as Nvidia, Amazon, and Meta among its backers. Scale AI specializes in providing high-quality, accurately labeled data essential for training machine learning models, including advanced tools like OpenAI’s ChatGPT.

Despite its success, the company is currently under investigation by the U.S. Department of Labor regarding compliance with the Fair Labor Standards Act, adding a layer of regulatory scrutiny.