Hedge Funds Sell AI Stocks for Five Straight Days

Funds unwound every AI stock purchase made since the start of 2025 as big tech shares lost $2 trillion in market value.

Updated on Nov. 1, 2026 in Stock Markets

Isometric editorial illustration of a tall stack of amber blocks beginning to topple against a cream background, evoking forced selling in leveraged markets. — Hedge funds sold AI stocks for five straight days in October, unwinding every AI purchase made since January as big tech shares lost $2 trillion in value. AI Illustration. Upload story photo >

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Hedge funds sold AI stocks for five consecutive days in October 2025, undoing every AI stock purchase they made since the start of the year. Big tech stocks erased $2 trillion from the market in late October, while the S&P 500 barely moved.

Why it matters

Hedge funds cut more than 8% of their total stock bets since June, their biggest retreat since at least 2017, signaling a broad pullback from the AI trade that had driven recent market gains. Because funds borrow to enlarge their bets, forced selling can push prices lower and prompt further selling across the market.

Morgan Stanley positioning data shows hedge funds cut more than 8% of their total stock bets since June, their largest retreat since at least 2017. Goldman's basket of hedge fund favorites fell 4.2% on October 22, its worst day since 2011, and it is unclear how far the unwind will extend.

The players

Morgan Stanley

A major American investment bank whose prime brokerage data tracks hedge fund positioning across global markets.

Goldman Sachs

A leading global investment bank that tracks a basket of hedge fund favorite stocks as a gauge of crowded positioning.

Samsung

A South Korean electronics conglomerate and one of the world's largest memory chipmakers, among the companies whose shares lost value.

SK Hynix

A South Korean semiconductor manufacturer and major memory chip producer that forecasts a memory shortage until 2030.

The details

Hedge funds borrow money to make their bets bigger, so when prices fall they sell shares to cut risk, and that selling drags prices lower and forces more selling. On the heaviest day, funds sold shares they owned about 3.5 times faster than they opened new bets against stocks, which suggests they were running for the exit rather than betting on a crash.

Since June 2025: Hedge funds began cutting more than 8% of their total stock bets.
October 2025: Hedge funds sold AI stocks for five straight days.
October 22, 2025: Goldman's basket of hedge fund favorites fell 4.2%.
Late October 2025: The selloff wiped about $2 trillion off the Nasdaq-100.

Market Dynamics

Morgan Stanley's prime brokerage data shows hedge funds' total stock bet retreat since June is their largest since at least 2017, marking a sharp break from the AI-led positioning that dominated earlier in the year. The unwind comes as corporate profits rose about 20%, leaving investors weighing strong earnings against crowded trades that are now being reduced.

Investors with exposure to AI and memory chip stocks may see their portfolios swing as hedge funds keep reducing positions, particularly through the coming weeks. Retail investors holding index funds should note that the S&P 500 barely moved even as big tech shares fell sharply, so concentration in mega-cap tech can amplify losses.

The takeaway

The hedge fund unwind shows how leverage can turn a crowded trade into a fast market retreat, even when corporate profits are growing. Investors should watch concentration in AI and memory chip holdings closely as positioning continues to adjust.