Goldman Sachs sees major shift on hedge fund chip bets

Goldman Sachs’ prime brokerage division reported hedge funds have shifted away from semiconductor stocks, making them the most net-sold U.S. subsector over the past month. The selling reflects reductions in long holdings rather than new short positions, reversing the first-quarter trend of steady inflows. Co-head of Prime Insights and Analytics Vincent Lin attributed the shift to portfolio rebalancing pressures, as semiconductor stocks—part of Goldman’s AI basket—have outperformed the S&P 500 by over 50% since early 2025. Despite the selling, hedge fund exposure to AI-related stocks remains near all-time highs, indicating no fundamental retreat from the sector. Goldman’s data shows cumulative semiconductor purchases since early 2025 rank among the highest for any U.S. subsector, reinforcing AI infrastructure as a key investment theme. However, funds appear to be rotating capital geographically, with Asia seeing net buying while trimming U.S. chip positions. The shift coincides with rising bond yields, pushing hedge fund macro hedging to a 10-year high. Short positions in equity indexes, ETFs, and macro instruments have surged, suggesting cautious positioning amid broader market volatility. Goldman’s analysis notes the distinction between trimming profitable positions and losing confidence in AI’s long-term growth potential. Semiconductor stocks remain critical to AI investment strategies, but hedge funds are managing exposure limits by reducing long holdings. The firm’s AI semiconductor basket continues to outperform, yet the rebalancing trend signals a tactical adjustment rather than a strategic pivot away from the sector. Goldman’s broader flow data also highlights a broader rotation in regional allocations, with Asia gaining traction as a destination for capital.