Hedge funds pulled back from technology stocks at their fastest pace in at least a decade last week, as the sharp selloff in global tech shares prompted investors to reduce exposure to one of the market’s most crowded trades, according to Goldman Sachs’ prime desk, Bloomberg reported. During the five trading sessions through October 15, hedge funds cut their technology positions by the largest proportion in Goldman’s data going back to 2016.

The retreat came as the AI trade lost momentum, with technology stocks bearing the brunt of the broader market selloff. 5% last week, marking its steepest drop since April 2025, as the global AI trade unwound.

Technology was also the worst-performing group in the MSCI World Index during the five sessions covered by Goldman’s data. The selling extended beyond technology.

Global equities were net sold at a level equivalent to two standard deviations against the past year’s flows, according to Goldman’s data. Information technology led the reduction in exposure, recording its biggest de-grossing in two months, while semiconductors took the largest hit in dollar terms.

The moves showed how quickly hedge funds were cutting risk across parts of the AI-related trade as the selloff gathered pace, Bloomberg reported. Hedge funds remain heavily exposed to big techDespite the sharp pullback, hedge funds had not walked away from technology stocks.

5% of the global Prime book, putting it in the 90th percentile of the past five years, according to Goldman. The shift was instead toward caution.

The latest data therefore pointed to a reduction in risk rather than a wholesale exit from technology. Hedge funds were still heavily positioned in the sector, but the pace of de-risking showed that investors had become more wary of the AI-driven rally.