The retreat comes as concerns mount over AI financing costs and rising debt yields. AI-related high yield credit spreads widened 50 basis points to 371 bps, and several AI data center bonds now yield above 10%, according to market data. Goldman Sachs projects $720B in AI project financing and direct hyperscaler debt issuance in 2027, a critical pivot as AI capital expenditure already accounts for approximately 50% of S&P 500 earnings growth. This institutional exodus contrasts with retail investors, who poured a record $7B into the 3x semiconductor ETF SOXL and $1.3B into the 3x Nasdaq ETF TQQQ last week.
Tuesday, October 20, 2026
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Hedge Funds Erase All 2025 Net Tech Buying in Record Week
US Markets7 hours ago
The Nasdaq 100 fell 5.5% last week as institutional traders slashed semiconductor and AI holdings at a rate unseen since 2016. Hedge funds reversed all cumulative net buying in the tech sector since the start of 2025 in a single week through October 15, per Goldman Sachs prime desk. While fund net leverage dropped to a 5 year low of 43.7%, gross leverage climbed to 213.9%, indicating that managers are aggressively increasing short positions rather than exiting the market entirely.
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