Hedge Funds Post Rare Broad Losses as AI Spending Doubts Spark Tech Selloff

Global hedge funds suffered a broad decline on Oct. 22, with all three major equity strategies falling more than 1% in the same session for the first time since the COVID-19 pandemic, according to Goldman Sachs prime brokerage data. Global fundamental long/short managers fell 1.4%, their worst single-day performance since July 16, with telecom, media and technology-focused funds down 2.7% on average. Systematic long/short funds lost 1.3%, and multi-strategy platforms dropped 1.9%. More than two-thirds of hedge funds ended the day in the red. The selloff was driven by mounting doubts over returns on massive AI investments. Meta Platforms (META) fell 7% after announcing a new share class to raise capital, while Nvidia (NVDA) dropped 4%. The Nasdaq Composite slid 2.6% and the Nasdaq 100 lost 2.9%. Rising oil prices added to inflation concerns, and selling pressure spread to Asian markets. Goldman estimated global fundamental long/short funds are down 3.8% month-to-date but remain up 8.8% for the year. Technology and Asia-focused hedge funds were the biggest October losers, down roughly 10% and 9%, respectively.