Goldman Sachs Says Hedge Funds Cut AI Stock Exposure to Lowest Level This Year

Hedge funds are reducing their exposure to artificial intelligence-related stocks, according to a new analysis. The recent drop in semiconductor shares came despite strong earnings and favorable outlooks, with profit-taking and position adjustments cited as the main drivers.

BlockBeats, a crypto-focused media outlet, reported on July 17 that The Wall Street Journal, citing Goldman Sachs prime brokerage data, said hedge fund exposure to AI-themed stocks had fallen to its lowest level this year.

The AI stock basket includes hardware and semiconductor names that have surged recently, including AMD, Micron and Nvidia.

Goldman Sachs' data indicated the latest decline in AI and chip stocks reflected profit-taking and position rebalancing after a sharp run-up, rather than a sudden deterioration in fundamentals.

The reduction came after a strong rally in semiconductor shares. Even after Taiwan Semiconductor Manufacturing Co. reported strong earnings and ASML raised its guidance, chip stocks still faced selling pressure. The Philadelphia Semiconductor Index fell more than 4% on Thursday.

Goldman Sachs said some money may already be shifting out of crowded semiconductor trades and into large cloud companies that have underperformed this year. Meta, Alphabet and Oracle were cited as possible destinations.

The move suggests enthusiasm for AI investment has not faded. Instead, capital may be rotating from sharply higher chip stocks into AI infrastructure names that have risen less.