Hedge funds cut tech exposure at near-record pace as Nasdaq drops 6.4%

Investing.com — Hedge funds ran for the exits last week, and then the market bounced anyway. Tech was by far the most heavily net-sold sector, both globally and in the US, at a pace that roughly matched the record in Goldman Sachs prime brokerage data going back to 2016.

Still guessing which stocks will beat the market? Our AI portfolio updates monthly and is outperforming the S&P 500 by 118%. See this month’s list »

The great de-grossing: hedge funds dump tech

Tech was by far the most heavily net-sold sector, both globally and in the US. The pace roughly matched the record in Goldman Sachs prime brokerage data going back to 2016. Hedge funds also sold US industrials at the fastest pace since April 2020, and the data runs through Nov 6. As of 10:44 AM EST on Monday, Nov 9, the S&P 500 is at 7,522.79 (+1.98%) and the VIX is at 20.89 (-18.53%). Positioning dropped faster than prices have recovered.

What triggered the rush

The trigger was political, not fundamental. After Democrats won both chambers of Congress and key governorships in Texas and Georgia, investors began to question how much data-center capacity would actually be built. Reuters noted that all but one of 41 data-center ballot measures went against data centers, according to Ballotpedia (Nov 5, 2026). Texas matters most. One analysis says Texas and Georgia together account for roughly a third of planned US data-center investment, and governor-elect Gina Hinojosa has said she would ban new projects until lawmakers pass rules.

The market reaction was sharp. The Nasdaq 100 fell 6.4% on Thursday, its worst day since 2020, per Investing.com (Nov 6, 2026). The Philadelphia Semiconductor Index fell more than 12%. Jefferies called it “reactionary, not a fundamental reset.”

The positioning numbers

The leverage data shows how forced the de-risking was:

Unsure what to buy ahead of earnings? Our AI’s recent pre-earnings calls delivered gains of +77% to +118% after results dropped. See this month’s earnings picks »

Gross leverage counts both long and short positions, so a drop of that size means funds cut risk broadly, not just in tech. The biggest wave of single-stock net selling in four months fits that picture. Funds sold what had worked and what was liquid.

Stabilization, with a caveat

Hedge funds finished the week as net buyers in Goldman’s equity trading desk data, driven mostly by Friday. That buying was largely attributed to covering macro positions such as indexes and exchange-traded funds. This is a risk-reduction signal rather than conviction buying. Funds buying back index hedges is not the same as re-buying single-stock tech longs.

Price action since then has leaned toward recovery. The latest data for the PHLX Semiconductor Index shows 9,906.70 (+5.50%) and the Nasdaq 25,187.12 (+2.47%). Those readings appear to reflect Friday’s rebound rather than today’s trading. The semiconductor index is still down 21.20% over one month. Among individual names:

• Alphabet (GOOGL): $293.78 (+3.16%)

• Microsoft (MSFT): $541.57 (+2.07%)

• Nebius (NBIS): $138.67 (+7.09%)

• Bloom Energy (BE): $197.33 (+13.91%)

• IREN (IREN): $21.54 (-0.46%)

(Quotes as of Nov 9, 2026, 10:43–10:44 AM EST.) The uneven rebound is informative. Bloom Energy, which supplies fuel cells for Google’s Wyoming project and fell more than 14% on Nov 5, has led. IREN, which rose 18% on Friday after reporting results that beat expectations, is flat today.

Why the bull case still stands

• Capex is still large. Alphabet pushed ahead with a $17B Wyoming project even as opposition grew. Microsoft’s plan for about 38 gigawatts by 2032 points to continued expansion (Sep 10, 2026).

• Politics shifts location, not necessarily volume. Capacity may move to friendlier states such as Wyoming.

• Washington is divided. Democrats control Congress, but a Republican president remains in the White House, which limits federal action.

• Positioning is cleaner. After a record de-grossing, there is less forced selling left.

The bear case

• Timelines are lengthening. Permitting, power procurement and construction delays hit the order books of chip and equipment makers with a lag. Names such as Lam Research (LRCX) and Marvell (MRVL) were pulled lower alongside the sector.

• Leveraged builders are exposed. Microsoft tightened oversight of neocloud projects (Nov 5, 2026), a sign that financing and delivery risk is already changing behavior.

• Macro is not helping. Inflation is elevated, and the October jobs report raised bets on a December Fed hike. Brent is at $95.13 (-3.24%), which helps, but a rate hike would pressure growth valuations.

• Short covering can fade. A rebound driven by hedge unwinds needs fresh buyers to last.

The takeaway

The sell-off was a record-scale repricing of how fast AI capacity can be built, not of whether it will be. The rebound shows buyers returned quickly, but the funds that cut gross exposure by 8.7 points have not yet shown they are re-adding it. Watch next week’s CPI report, TSMC’s monthly sales and whether hedge funds rebuild single-stock tech positions or only cover hedges.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Original Article

Hedge funds cut tech exposure at near-record pace as Nasdaq drops 6.4%

Nvidia intervention preceded transfer of chip probe to Justice Department

Nasdaq jumps over 2% as Wall Street rebounds after AI rout, but Nvidia excluded