Hedge Funds Just Had Their Worst Week Since 2024 — $20 Billion of Tech Selling Behind It

Trend-following hedge funds just had their worst week since 2024 — a 2% drop in a single week — as doubts about whether massive AI spending will ever pay off sparked the Nasdaq 100's biggest weekly fall since April 2025 and $20 billion of tech selling in two weeks. That is the headline finding of a Goldman Sachs prime brokerage note seen by Reuters on Monday, October 26, 2026, and it explains why last week's selloff felt so much bigger than any single earnings report.

What happened, in one answer

Systematic long-short hedge funds — the algorithm-driven funds that ride market trends until those trends break — fell 2% last week, their worst weekly performance in two years, according to the Goldman Sachs note reported by Reuters on Monday. Fundamental long-short funds, the human stock-pickers, fell another 1.1% in the same week. The trigger was a broad repricing of the AI trade: the Nasdaq 100 fell 5.5% last week, its biggest weekly decline since April 2025, when tariff turmoil roiled global markets.

Why is it blowing up?

Because this was not one bad stock. Meta Platforms reported strong earnings — and still slid about 10% over the week after indicating it would need to raise more capital to fund its AI investments. That reaction, repeated across the AI complex, told professional investors the market's question has changed: strong AI demand alone is no longer enough, and funds want evidence of monetization, margins and cash flow instead. When the most crowded trade in the market starts asking for proof, the funds sitting on top of it move first — and move together.

The selling was measurable. Goldman said its prime brokerage desk recorded about $20 billion in selling of technology stocks over the last two weeks, close to the $23 billion seen in July's major unwind. Single stocks saw their largest de-grossing — funds pulling back overall position sizes rather than rotating — since late July, and U.S. equities were net sold for a third straight week, and for the fourth time in five weeks. Bond markets were whipsawed at the same time, with investors buying U.S. Treasuries for safety while selling the debt of more fragile economies such as France.

The key facts

Worst week since 2024: Systematic trend-following funds fell 2% last week; fundamental long-short funds fell 1.1%, per the Goldman Sachs note seen by Reuters.
Nasdaq 100: Down 5.5% last week — its biggest weekly fall since April 2025.
Meta's signal: Shares fell about 10% over the week despite strong earnings, after the company indicated it would need to raise more capital for AI spending.
$20 billion out of tech: Goldman's prime desk saw roughly $20 billion of tech-stock selling in two weeks, near July's $23 billion unwind.
Still up for the year: Fundamental funds are down 3.8% in October but up 8.8% in 2026; systematic funds are down 1.1% in October but up 18.7% this year.
Earlier in the month: On October 22, all three major hedge-fund strategies lost more than 1% in a single day for the first time since the COVID era, according to an earlier Goldman note reported by Reuters — and funds cut tech holdings at the fastest pace in at least a decade in the five sessions through October 15.

Why the smart money got caught

Trend funds make money when markets move in straight lines, and lose it when a crowded trend reverses all at once — because similar models see the same exit signal on the same day. October supplied exactly that setup: AI stocks were the market's most crowded professional trade, and rising oil prices plus high borrowing costs gave the reversal a macro push. The result was deleveraging rather than debate — positions were cut because risk limits said so.

What's next?

This week's calendar decides whether the unwind is finished. Roughly a third of S&P 500 companies report earnings in the coming days, including Alphabet, Microsoft and Amazon, alongside a Federal Reserve rate decision — exactly the kind of catalysts that can either validate AI spending with real cash-flow numbers or deepen the skepticism. U.S. futures edged higher early Monday as oil retreated, but Goldman's flow data says professional positioning is now lighter and more defensive than it has been in months. This post reports what happened and how markets reacted; it is not financial advice and not a recommendation to buy, sell or hold anything.

Sources

FAQ

How badly did hedge funds do last week?

Systematic trend-following funds fell 2% — their worst week since 2024 — and fundamental long-short funds fell 1.1%, according to a Goldman Sachs note seen by Reuters.

Why did hedge funds lose money in the AI selloff?

They were heavily positioned in the crowded AI trade. When the Nasdaq 100 fell 5.5% in a week and Meta slid about 10% despite strong earnings, similar risk models forced many funds to cut positions at the same time.

How much tech stock did hedge funds sell?

Goldman Sachs' prime brokerage desk recorded about $20 billion of technology-stock selling over the last two weeks, close to the $23 billion unwind seen in July.

Are hedge funds down for the year?

No. Despite October's losses, fundamental long-short funds were still up 8.8% in 2026 and systematic funds up 18.7%, according to Goldman.