Hedge Funds Wipe Out All 2025 AI Stock Bets in October Deleveraging Wave
A five-day sell-off erased every AI stock hedge funds had bought since 2025, dragging memory chipmakers and the Nasdaq-100 down by hundreds of billions of dollars.
What to know
- Hedge funds cut more than 8% of their total stock bets since June, their biggest retreat since at least 2017, per Morgan Stanley.
- A five-day October selloff undid every AI stock purchase hedge funds had made since the start of 2025, per Goldman Sachs.
- Memory chipmakers Samsung, SK Hynix, Micron and SanDisk lost over $700 billion in under two weeks; the Nasdaq-100 selloff erased about $2 trillion.
- Analysts disagree on the cause: Visser and Lee point to leverage unwinding or a single forced seller, while Goldman warns the deleveraging may be far from finished.
Jordi Visser Macro investorTom Lee Fundstrat analystGoldman Sachs Investment bank / data providerMorgan Stanley Investment bankSK Hynix Memory chipmaker
How it unfolded 1 development · click the chart to see its coverage posts
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Social media frames the selloff as the AI trade collapsing
Posts on Bluesky and Mastodon describe the stock declines as evidence the AI trade is unraveling, linking it to banks pulling credit from AI companies alongside the hedge fund exodus.
“AI is going spiral to nothing like every crappy bitcoin copy.”
— bladeofthes.bsky.social -
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All the stocks are tanking in the USA today. Following the removal of credit from AI companies by banks last month. And the mass selling off of Trillions of Dollars of stocks by Hedge Funds. AI is going spiral to nothing like every crappy bitcoin copy.
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Analysts split on leverage unwind versus a deeper AI bubble — Macro investor Jordi Visser attributes the slide to the rapid unwinding of borrowed-money positions rather than weak AI demand; Fundstrat's Tom Lee suspects a single forced seller drove the drop, while Goldman Sachs cautions the unwind looks closer to its start than its end even though funds' AI holdings still rank in the top 17% of the past three years.
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Morgan Stanley tallies hedge funds' biggest retreat since 2017 — Morgan Stanley data show hedge funds cut more than 8% of their total stock bets since June, the largest pullback since at least 2017, consistent with forced deleveraging rather than directional bearish bets.
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Late-October rout erases $2 trillion from tech stocks — Big tech stocks crashed, wiping about $2 trillion off the Nasdaq-100; memory chipmakers Samsung, SK Hynix, Micron and SanDisk together lost more than $700 billion in under two weeks even as SK Hynix forecasts a memory shortage lasting until 2030.
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BeInCrypto asks whether China's AI bubble worries will hit the US — A report raised the question of contagion from China's AI bubble concerns reaching American markets, days before a major Nasdaq selloff.
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Goldman's hedge-fund favorites basket posts worst day since 2011 — Goldman's basket of hedge funds' most-favored stocks fell 4.2% on October 22, its steepest drop since 2011, as the bank's prime brokerage desk tracked accelerating deleveraging.
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Hedge funds sell AI stocks for five straight days — Over five consecutive trading days in October, hedge funds sold enough AI shares to undo every AI stock purchase they had made since the start of 2025, according to Goldman Sachs data.