What drove the damage
Goldman’s client note said Thursday’s decline marked a rare, across-the-board hit, describing an unusually broad setback: for the first time since Covid, every one of the firm’s three main equity strategy categories fell by over 1% during the session. The pain lined up with heavy selling in US tech as doubts grew over whether massive AI budgets will deliver, and with worries that higher oil could stoke inflation. The Nasdaq 100 dropped 2.9%, its biggest fall since June.
How strategies fared
Global fundamental long/short managers fell 1.4% at the close, their worst daily showing since July 16. Funds focused on telecommunications, media and technology slid by an average of 2.7%. Systematic long/short funds declined 1.3%, which Goldman called their third-worst day since December 2023. Even the big multistrategy platforms – built to buffer firm-level drawdowns – dropped 1.9%, their second-roughest performance since the tariff-driven selloff in April 2025.
Positioning and the squeeze
Goldman estimated that “more than two-thirds of hedge funds finished down on the day,” adding that concentrated short bets were pressed higher into the back half of the session. Asia-focused fundamental long/short managers also lost money, leaving them down 9.3% for the month to date, though the group remains up 14.2% for the year.
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The AI whiplash context
Thursday’s move fit a year of sharp swings around AI winners and laggards. Rallies in names like SK Hynix Inc. and Micron Technology Inc. have been interrupted by abrupt drops. In July, a slump across technology pushed the hedge fund Situational Awareness to the edge, stoking concern the AI bull run might be tiring. The bottom line: factor swings and crowding can cut both ways – a reminder to watch concentration risk in your portfolio.
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