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Hedge funds cut tech near the highest pace since 2016 amid midterm AI concerns

U.S. long/short gross leverage fell 8.7 percentage points to 207.5%, the largest weekly drop since March 2020, Goldman prime data show.

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Why it matters: The AI trade is being de-risked in the prime book just as local ballots and the midterms intensify concerns that data-center construction could face delays.

For information only, not investment advice.

A large grey data center under construction on harvested farmland, with a crawler crane, boom lifts, cooling units and a power substation behind a construction fence.

Hedge funds pulled back from technology last week at a pace near the highest since Goldman Sachs began tracking the series in its prime-brokerage data in 2016.1 Tech accounted for the largest share of net sales by global and U.S. funds, Bloomberg reported via Longbridge.1

The books also got smaller. Gross leverage at U.S. fundamental long/short equity funds fell 8.7 percentage points to 207.5%, the largest weekly decline since March 2020, and net leverage fell 3.7 points to 43.3%.1 As of Nov. 6, net selling of individual stocks hit a four-month high.1 Funds still recorded overall net buying for the week, Longbridge said, mainly from Friday short covering in indexes and ETFs rather than large-scale rebuilding of individual tech positions.1

The political backdrop is the midterms and local fights over AI data centers. Longbridge tied the cut in tech exposure to concerns that election results could slow infrastructure expansion.1 CNBC, citing Ballotpedia, counted 41 local data-center measures in 10 states; voters sided against data centers in every contest with results except Harwood, N.D., and Ohio alone had 21 measures.2 In a CNBC poll, 56% of voters called data centers a crucial or major factor.2

Community opposition was already showing up in project tallies. The International Data Center Authority said that from January 2024 through May 2026, at least 46 AI data-center projects across 20 U.S. states — more than $170 billion in announced investment — were blocked, withdrawn or stalled.3 Goldman Sachs prime-brokerage data reported by HedgeWeekly had already shown funds reversing all net purchases of global AI-linked stocks made since the start of 2025 within five sessions, even while technology remained 23.5% of Goldman's prime book.4

Sources

  1. Goldman Sachs: Hedge Funds Sell Off Tech Stocks at Near-Record Pace, Leverage Plummets, Longbridge (citing Bloomberg / Goldman Sachs)
  2. Voters rebuff data centers in every ballot measure except one during the 2026 midterms, CNBC
  3. IDCA Launches Community Assurance Program to Protect Communities and Address Data Center Pushback, International Data Center Authority via PR Newswire
  4. Hedge funds have unwound their AI stock buying since 2025, Goldman prime data shows, HedgeWeekly

Tags: markets-moves · ai · elections