Business · Companies · 16 hrs ago
Wall Street hedge funds cut investments after AI stock sell-off
AI-related shares plunged after the US midterm elections, leaving some Wall Street hedge funds with losses.
The sell-off hurt funds that had bet on AI stocks rising, as well as some short bets against companies expected to lose from AI.
More than 40% of stock-picking funds were flat or down for the year by late October.
Morgan Stanley said these funds had cut their exposure to the stock market by about 9% since June, the largest such reduction in more than a decade.
Some funds are also shrinking their teams and narrowing their investments; Samlyn Capital has cut most of its positions outside financial companies and is reducing senior investment staff in those areas.
Funds selling at the same time could deepen the market drop, prompting further cuts and more selling.
The sources describe these market effects as a risk, but do not say what the funds will do next.
AI-related stock losses have prompted major Wall Street hedge funds to cut investments and staff.
Morgan Stanley reported that stock-picking hedge funds made their largest active position cuts in more than a decade last month.
More than 40% of those funds were at break-even or in negative territory for the year as of the end of October.
Technology, media and telecommunications-focused funds lost more than 4% in one day, according to Goldman Sachs.
Simultaneous selling by funds could deepen market declines and prompt further investment cuts.
- Who
- Major Wall Street hedge funds, including Samlyn Capital.
- What
- They are cutting investment positions and staff after losses linked to AI-related stock declines.
- When
- The position cuts were reported last month; fund returns were assessed as of the end of October. The articles were published on November 8, 2026.
- Where
- Wall Street and the US stock market.
- Why
- AI-related stocks fell after the US midterm elections, causing losses for funds. The articles say funds also lost money on short positions in companies expected to be hurt by AI.
This story does not have two clearly opposing sides.
Stock-picking hedge funds reduced their exposure to the equity market by about 9%.
Active position cuts by stock-picking hedge funds reached their highest level in more than a decade, according to Morgan Stanley.
More than 40% of stock-picking hedge funds were at break-even or had negative returns for the year.
The Wall Street Journal reported the position cuts and fund losses.
- Equity exposure
- Reduced by about 9% since June
- Position cuts
- Highest level in more than a decade
- Funds at break-even or worse
- More than 40% of stock-picking hedge funds, as of end-October
- TMT fund losses
- More than 4% in one day
- Samlyn Capital
- Cut most non-financial-sector stock positions and reduced senior investment analyst roles in those areas