Hedge Funds Post Worst Day Since COVID Era as AI-Fueled Tech Selloff Deepens

Global hedge funds suffered their steepest single-day losses since the COVID-era market rout this week, with all three major strategies tracked by Goldman Sachs falling more than 1% on October 22 — the first such simultaneous drop since the pandemic. The selloff was driven by mounting skepticism over massive AI infrastructure spending. Meta Platforms slumped 7% on Thursday, its largest drop since July, after announcing a new share class to raise funds. Nvidia fell 4% and the Nasdaq Composite lost 2.6%, its biggest decline since June 5. Asian markets from South Korea to China also sold off, pressured by higher oil prices and AI spending concerns. Goldman estimates global fundamental long-short funds are down 3.8% in October but remain up 8.8% year-to-date. Tech-focused and Asia-focused hedge funds have lost roughly 10% and 9% respectively this month through October 22. The downturn triggered deleveraging as losses in crowded AI-linked trades forced investors to cut exposure.