Tech Longs Rebuilt Just As AI Debate Turns Hostile

Hedge funds have been aggressively buying US technology, media, and telecommunications stocks in recent sessions. According to Goldman Sachs Prime Brokerage data, they purchased these stocks in 10 of the past 11 sessions, with a two-week pace of long buying reaching its strongest since June 2025.

This rebuilding of positions has occurred just as political and policy risk surrounding AI has moved back into the foreground. The concern is that hedge funds may be taking on too much risk, particularly given the concentration in certain areas such as semiconductors and memory within the AI supply chain.

While broad China ETFs have been losing capital, demand remains concentrated in these specific sectors. This pattern suggests that managers want selective exposure to technology without owning the entire market backdrop.

The protection offered by broad ETF and index shorts may not be sufficient if regulation, competition, or safety concerns directly impact crowded AI holdings. This could lead to significant losses for hedge funds and other investors who have taken on too much risk in these areas.