Hedge funds cut their exposure to technology stocks at the fastest pace in at least a decade last week as a global selloff in AI-linked equities triggered widespread position reductions, according to a report by Bloomberg citing Goldman Sachs prime brokerage data.

During the five trading sessions to 15 October, hedge funds reduced technology positions by the largest proportion since Goldman's records began in 2016, while gross trading activity declined at its fastest pace in nearly three months.

The selling coincided with a sharp reversal in the AI trade, with the Nasdaq 100 falling 5.5% over the week, its steepest decline since April 2025. Technology was also the worst-performing sector in the MSCI World Index during the period.

Goldman's data showed global equities were net sold at a rate equivalent to two standard deviations of historical flows over the past year. Technology accounted for the heaviest selling, recording its largest reduction in gross exposure in two months, with semiconductor stocks seeing the biggest dollar outflows.

Despite the selloff, hedge fund exposure to technology remains elevated. The sector accounts for 23.5% of Goldman's global prime brokerage book, with net allocations still ranking in the 90th percentile relative to the past five years.

However, positioning has become more defensive, with hedge funds' net leverage falling to a one-year low of 48.6%, reflecting a reduction in long exposure relative to short positions.