TLDR
- Hedge funds have been selling semiconductor stocks to lock in profits after a major rally, according to Goldman Sachs data.
- Goldman’s AI semiconductor basket has outperformed the S&P 500 by more than 50% this year.
- Semiconductors became the most heavily net-sold US subsector over the past month.
- Funds are not abandoning AI — overall exposure to US AI stocks remains near record highs.
- Short positions in broad market indexes and ETFs have hit a decade-long peak as a hedge against wider risks.
Hedge funds have been quietly reducing their semiconductor positions after a strong run-up in chip stocks, according to data from Goldman Sachs’ prime brokerage desk. The moves are being framed as portfolio management, not a shift away from artificial intelligence.
Goldman’s AI semiconductor basket has outperformed the S&P 500 by more than 50% this year. The S&P 500 itself gained more than 18% between late March and a recent three-day pullback. That kind of rapid price increase tends to attract profit-taking.
Over the past month, semiconductors and semiconductor equipment became the most heavily net-sold US subsector tracked by Goldman’s prime desk. Funds have been trimming long positions rather than adding new short bets against the sector.
The semiconductor sector has now moved to a net-sold position for the year to date. That’s a change from earlier in the year when funds were building exposure to the space.
South Korea’s Kospi index, often watched as a gauge of global appetite for AI infrastructure, briefly crossed 8,000 points for the first time in mid-May. It extended its year-to-date gain beyond 80% before pulling back sharply.
Funds Keeping AI Bets Intact
Despite the selling in chip stocks, Goldman’s data shows that overall exposure to US artificial intelligence stocks tracked by its technology, media, and telecommunications basket remains near record highs.
Vincent Lin and the Goldman prime team told clients that funds are “consolidating and managing their semiconductor exposure within their overall portfolios, rather than signaling a paradigm shift away from the AI theme.”
In other words, the selling appears to be about taking gains on a winning trade, not a change of view on AI as a long-term theme.
Hedging Activity Picks Up
At the same time funds have been selling chips, they have been adding short positions in broad equity indexes and exchange-traded funds. Those positions are now at their highest level in a decade.
This kind of hedging is typically used to reduce exposure to wider market swings without selling specific stock picks.
Gross leverage across hedge funds has risen to a fresh five-year high this month. Net leverage, however, has stayed relatively stable.
Goldman noted that this setup looks different from the kind of enthusiasm seen among retail investors right now. The firm described it as inconsistent with broad euphoria.
The S&P 500 was trading around 7,410 as of the time of this reporting, down about 0.31% on the day.
Taken together, the data suggests hedge funds are managing risk carefully while keeping their core AI positions in place.
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