Hedge funds with heavy exposure to artificial-intelligence positions recorded notable declines in the week through October 15, as a broad reversal across those holdings weighed on portfolios, with funds oriented toward Asian markets absorbing the greatest pressure.

According to a note distributed by Goldman Sachs's prime brokerage division, funds in the global fundamental long-short category — a strategy centred on individual stock selection — recorded negative returns on each trading day of the period, with the cumulative decline through October 15 reaching 2.9%. According to a note from Goldman Sachs, hedge funds running long-short strategies offloaded positions in AI-related equities worldwide across each of the past six trading days.

Worldwide, equity-focused hedge funds recorded a 0.9% drop in Thursday's session, a pullback that extended across multiple investment strategies. Funds oriented toward Asian markets posted a 2.6% loss, whereas vehicles concentrating on the technology sector fell by 2.0%. Worldwide, both systematic long-short vehicles and multi-strategy funds posted losses in the neighbourhood of 1%.

Across Thursday's session, world equity markets recorded net selling for a second consecutive day, though the pace eased considerably from Wednesday's levels, as unwinding of risk positions continued to dominate flow — with investors reducing long holdings at a rate that outstripped the covering of short positions; year-to-date, the funds in question carry gains of 14.3%. Goldman Sachs noted in a Friday client memo that the combined volume of long liquidations and short-covering activity across global markets that day amounted to approximately half the dollar-denominated total recorded in the prior session.

By the close of Friday's trading, stocks had moved lower across the board, with AI-linked names — CoreWeave and Broadcom included — retreating from earlier positions, while climbing oil prices stirred caution among market participants heading into the weekend. Bonds issued by CoreWeave, the data centre operator, came under sustained pressure through the week, with yields climbing past the 15% mark as part of a broader market retreat.

Questions about whether large-scale AI outlays can deliver returns within a short horizon have grown among investors, particularly as persistently elevated borrowing costs continue to weigh on near-term calculations. Inflation readings that came in above forecasts over the course of the week put additional pressure on semiconductor and AI supply chain equities by lifting expectations for further rate increases, while Goldman Sachs noted in a Thursday research note that all three broad strategies had gone without a single-day drawdown exceeding 80 basis points from the pandemic period through the close of 2025 — a threshold that has now been breached on three separate occasions in the current year, specifically on February 4, July 28, and October 15.

Markets with heavy exposure to semiconductor stocks absorbed the steepest losses during the downturn. On Thursday, South Korea's KOSPI index fell 8 percent to reach its lowest closing level in six months, while Taiwan's equity market shed more than 3 percent across the same session.

Data from Goldman Sachs show that fund managers concentrated in Asian equities shed 6.8% through the first half of October, trimming what had been a run of annual gains topping 40% at their late-June high point to less than half that figure.