In London on January 27th, a note from Goldman Sachs pointed out that hedge funds were closely monitoring the emergence of China's new AI model as a challenge to U.S. dominance in artificial intelligence. This shift caused a drop in Nasdaq futures and technology stocks as investors reacted to the increasing popularity of a Chinese discount AI model.
According to the note seen by Reuters on Monday, hedge funds adjusted their positions last week, moving away from tech stocks. This was indicated through data from Goldman's prime brokerage desk covering the period of January 17th to 24th, showing a broader trend of hedge funds selling off U.S. stocks related to the tech industry, including firms supporting AI infrastructure.
Despite the potential benefits for power and energy-related companies from advancements in AI, hedge funds have been cautious, with the note highlighting that over the past year, hedge funds have been inclined to sell stocks that could potentially gain value in a U.S.-led AI boom.
The note also pointed out that while some hedge funds have maintained their trades with the highest number of long positions in two years, many others have been more likely to sell these stocks. This cautious stance was echoed by Bruno Schneller, managing director at Erlen Capital Management, who mentioned that hedge funds are adopting a "wait-and-see" approach towards U.S. stocks in the AI sector due to uncertainties surrounding regulatory complexities and the enforcement of related policies.
Schneller also highlighted concerns about the sustainability of U.S. dominance in AI, mentioning competition from global players like DeepSeek, a Chinese AI startup. Additionally, he noted that large-scale projects such as the Stargate AI initiative further contribute to the ambiguity in the market, keeping investors on edge.