Wall Street is pulling the plug on technology stocks, and the implication could stretch well beyond just traditional markets. Hedge Funds have aggressively reduced exposure to the US information technology sector, recording net sell-offs in six of the last eight weeks.
According to Loading profile preview prime brokerage data, this marks the largest eight-week aggregate reduction in tech exposure in at least a decade, surpassing even the pace seen during the 2022 bear market.
The selling hasn’t been limited to one corner of the sector either. Software, semiconductor, and hardware companies hav eall been caught in the institutional unwind making technology the most-sold US sector last week.
Tech Exposure Hits Multi-Month Lows
The number paints crystally clean picture here. The Hedge fund net exposure to US tech is down by nearly 10 percentage points relative to overall US exposure, dropping to around 15.5%. That’s the lowest level since February 2026 and effectively wipes out most of this years position gains.
What’s striking is the speed of the reversal. Technology had recently been one of Wall Street’s most crowded trades, fueled by optimism surrounding artificial intelligence and semiconductor companies. Now, institutions appear to be reassessing whether soaring AI valuations and corporate spending can realistically justify future earnings.
If this pace continues, overall hedge fund exposure to the technology sector could fall to its lowest level in at least five years as early as next week.
AI Valuation Concerns Take Center Stage
The broader backdrop suggests this isn’t merely routine profit-taking. longside reducing technology holdings, hedge funds have reportedly increased bearish positioning on the wider market to the highest level seen in a decade. That shift reflects growing caution toward risk assets rather than isolated stock selection.
The move has reignited debate over whether enthusiasm surrounding artificial intelligence has pushed valuations beyond what underlying earnings can currently support.
AI Crypto Sector Faces Macro Pressure
The macro implications could extend into digital assets if institutional risk appetite continues deteriorating.
Many high-beta crypto assets historically move alongside broader market liquidity conditions. Under a prolonged risk-off environment, capital typically rotates away from speculative sectors first.
That leaves decentralized AI projects particularly exposed. AI infrastructure, compute, and agent-focused networks such as Bittensor (TAO), $NEAR Protocol ($NEAR), Render (RENDER), and the Artificial Superintelligence Alliance (FET) could face additional pressure if institutional investors continue reducing technology exposure. According to the data provided, these assets may be forced to retest long-term structural support levels should liquidity continue to tighten.