Hedge funds dumped chip stocks for a fourth week as AI shares sold off

US hedge funds sold tech hardware stocks for a fourth week in a row, according to a client note from Goldman Sachs on Friday, in line with a recent decline in global chip shares and just before many of these companies will report earnings.

Tech shares and especially semiconductors have propelled the broader equity market higher this year. But tech stocks have been swinging dramatically on a combination of profit-taking and concern about the high levels of spending on AI and when the companies behind those outlays might see returns.

The SOX index, which tracks the performance of semiconductor stocks, declined 4.2% in the week to July 3.

Here’s what the Goldman Sachs note said about hedge fund trading in that week:

• Info tech stocks including semiconductor and hardware companies was the most net sold US stock sector for the fourth week in a row.

• Hedge funds had more sold stocks than bought for the third straight week.

• Last week hedge funds mostly sold single US stocks

• Hedge funds sold other stock sectors including industrial and consumer discretionary shares.

• These investors bought index and ETF products, which often rise alongside the wider market.

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• Hedge funds bought commercial services, consumer staples, real estate and energy stocks.

• Hedge funds might sell stocks to close bets based on an expectation for those shares to rise, or as part of a bet on those shares falling in value over time.

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