Hedge Funds Accelerate Retreat from AI Trade

An nearly two-year-long rally in AI-related long positions is facing a sharp reversal. Goldman Sachs Prime brokerage data show that from October 8 to 14, hedge funds net sold global AI stocks for five consecutive trading days, erasing in just one week the cumulative net buying recorded since early 2025. Meanwhile, the 20 largest AI and semiconductor stocks worldwide have collectively lost more than $1 trillion in market value as of the latest data. The selloff has spread from the AI sector to global markets. South Korea's stock market has entered a bear market, and trading in Seoul triggered a circuit breaker. More concerning, overall hedge fund leverage remains elevated, and whether a concentrated unwinding of AI positions could trigger a new round of deleveraging has become a focal point for market attention. (China Securities Journal)