Hedge Funds Reduce Exposure to AI Stocks Amid Risk-Cutting Measures
Hedge funds have moved to an underweight position in the artificial intelligence sector for the first time since early 2023. According to LPL Research, this shift is characterized by a significant reduction in gross exposure—the largest sustained de-risking period in over 15 years—rather than a direct bearish bet on the technology's fundamentals. Data indicates that fund managers sold existing long positions roughly 3.5 times faster than they opened new short positions, suggesting a strategy of risk liquidation to manage crowded trades rather than an expectation of a market crash. While recent rallies in AI-related stocks like CoreWeave and Dell Technologies have provided relief, analysts warn that much of this movement may be driven by short covering rather than new fundamental buying.
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Topics: AI trade hedge funds information technology sector risk management