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Goldman Says Hedge Funds Turn Bullish on US Stocks, Buy Tech

trade ideas :: 2025-02-11 :: source - bloomberg

By Natalia Kniazhevich

A trader making market decision: Photo illustration by Yahoo finance

(Bloomberg) -- Hedge funds emerged as big buyers of US stocks last week, shifting away from a previously bearish stance in the wake of stronger-than-expected earnings reports.

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After five straight weeks of net selling, hedge funds snapped up US equities at the fastest pace since November, resulting in the heaviest net buying of single stocks in more than 3 years, according to Goldman Sachs Group Inc.’s prime brokerage report for the week ended on Feb. 7.

The activity was heaviest in the information technology sector, where hedge funds bought the most since December 2021. It was their second largest buying spree in the last five years as they covered covering short bets and added long positions. Software and semiconductor stocks led inflows.

The activity “suggests that hedge funds became more constructive on and started leaning into the AI theme following the DeekSeek induced selloff on Jan 27th,” Vincent Lin, Goldman’s co-head of prime insights and analytics, wrote in a note to clients.

The shift in sentiment comes despite the volatile period for stocks as traders try to gauge the likely impact of President Donald Trump’s tariff plans and after the release of an artificial-intelligence tool by Chinese startup DeepSeek sent shockwaves across US tech stocks. But the recent slate of US earnings has also bolstered confidence.

“Against an uncertain macro backdrop, micro data revealed another strong earnings season,” wrote John Flood, Goldman’s partner and head of Americas equities sales trading.

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