Catenaa, Saturday, October 17, 2026- Global hedge funds suffered massive losses last week with the tech sell-off on Wall Street as investors question AI spending.
US stocks declined sharply on Friday as investors continued selling technology shares linked to artificial intelligence. Reuters reported that CoreWeave and Broadcom faced renewed pressure, while rising oil prices added to market uncertainty.
Reuters reported that CoreWeave has been one of the AI companies hit hardest in the sell-off, with the data center operator’s bonds selling off sharply this week and yields pushing above 15%.
The tech-heavy Nasdaq fell nearly 4.5% for the week, hammered by concerns that debt-laden AI infrastructure companies may not turn profits in time to repay debts, particularly as borrowing costs are expected to rise, according to Reuters.
The markets with major global chip companies in the index suffered the heaviest losses as South Korea’s benchmark KOSPI fell 8% to close at a six-month low on Thursday, while Taiwan stocks also fell more than 3%.
Goldman Sachs’ prime brokerage data showed that fundamental equity long-short strategies recorded losses throughout the trading sessions ending October 15, Reuters reported. The funds declined 2.9% during the period but maintained a year-to-date return of 14.3%.
“Following a sharp AI unwind on Wednesday and week-over-week, global equities were net sold again yesterday (Thursday) though at a much slower pace, driven by continued risk unwinds with long sales outpacing short covers,” Goldman said in the note on Friday.
“In dollar terms, yesterday’s global de-grossing activity, long selling and short covering combined, was roughly half of what we saw on Wednesday.”
Goldman added that global AI stocks collectively have been sold by long-short fund managers for six straight sessions, Reuters reported.
Meanwhile, Reuters also reported that on Thursday, hedge funds across strategies retreated sharply, with stock pickers globally losing 0.9%.
Among them, Asia-focused managers were down 2.6%, while tech-focused funds were off 2.0%. Global systematic long-short managers and multi-strategy funds also declined roughly 1%.
“What we saw was less a fundamental rejection of AI and more a classic, high-velocity unwind of a crowded trade meeting a macro reality check,” Bruno Schneller, Managing Partner at Erlen Capital Management, told Reuters.
“Hotter-than-expected US inflation data forced markets to reassess the path of interest rates, putting immediate pressure on the most capital-intensive parts of the AI complex,” he said.
Goldman Sachs data cited by Reuters showed that Asia-focused fundamental equity funds declined 6.8% during the first half of October. The losses substantially reduced their earlier gains, following a period in late June when the strategy had recorded year-to-date returns exceeding 40%.
“The interesting thing about this selloff is that it exposes just how much of the hedge fund industry has effectively been trading the same underlying theme, even when portfolios look very different on paper,” Schneller told Reuters.
