Hedge funds are dumping tech stocks at the fastest pace in seven months after piling in ahead of Nvidia’s will

Thibault Camus, AP; Jeff Chiu, AP

  • Hedge funds that enjoyed tech stocks before last week’s Nvidia gain are now getting paid out.

  • The pullback has led to a net selling of shares in the technology sector over the past four trading sessions.

  • Goldman Sachs said Magnificent Seven’s performance will have to give way to broader economic indicators.

Nvidia’s blockbuster earnings report last week was followed by a big outflow from the tech sector among hedge funds as they look to take some chips off the table after piling up ahead of the chipmaker’s results.

A letter to clients from Goldman Sachs’ prime brokerage unit said hedge funds sold technology at the fastest pace in seven months after a six-week buying period before Nvidia reported results last Wednesday.

“After a six-week buying streak, HF’s Tech shares sold off at the fastest pace in more than seven months as the sector net-sold for four consecutive sessions, including Thursday after NVDA results,” the analysts wrote.

Nvidia sent investors into a frenzy last Thursday with its earnings figures Market capitalization of $267 billiongood for the largest ever increase in market value in a single trading session.

“Despite last week’s ‘good vibes’ and strong NVDA earnings on Wednesday, the NDX has traded lower for four of the last five sessions as price action and activity levels start to show some more cross-action, creating some tension over the sustainability of momentum from here,” Peter Callahan, a technology, media and telecom sector specialist, wrote in the note.

Hedge fund investors have shifted their focus to other high-quality stocks, shifting cash from technology trading to real estate, consumer goods and materials, the note said.

That’s what the analysts said…

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