Hedge Funds Dump Tech Stocks at Fastest Pace in Decade, Crypto Assets at Risk

Hedge funds have aggressively reduced their exposure to US technology stocks, recording net sell-offs in six of the last eight weeks. This marks the largest eight-week aggregate reduction in tech exposure in at least a decade, surpassing even the pace seen during the 2022 bear market.

The selling hasn't been limited to one corner of the sector either, with software, semiconductor, and hardware companies all being caught in the institutional unwind. Technology had recently been one of Wall Street's most crowded trades, fueled by optimism surrounding artificial intelligence and semiconductor companies.

However, institutions appear to be reassessing whether soaring AI valuations and corporate spending can realistically justify future earnings. If this pace continues, overall hedge fund exposure to the technology sector could fall to its lowest level in at least five years as early as next week.