Goldman Sachs says hedge funds fuel biggest tech stock buying spree since 2021

Goldman Sachs Global Banking has reported that hedge funds have led the way in a surge of buying interest in tech stocks.

According to Vincent Lin, co-head of the firm’s Prime Insights & Analytics team, the most pronounced purchase of tech stocks in years has occurred in recent weeks after a number of companies posted better-than-expected quarterlies.

“If you look at the source of the buying, it was fairly broad-based, but tech was definitely the biggest component,” Mr Lin said.

Software and semiconductor demand

Goldman Sachs said stocks in the sector saw the largest net buying since December 2021, with software and semiconductors particularly in demand.

Mr Lin said that, while strong quarterly earnings may have prompted some of the equity demand, the buying interest may also have been driven by hedge funds returning to AI companies after the emergence of cheaper generative AI models in China.

Analysts have suggested that cheaper AI could spur more adoption of the technology.

Initial selling

“When those headlines broke on 27 January, hedge funds initially sold AI stocks,” he said.

“But once people had the time to digest the information coming out of China, some actually started to lean into AI.”

A broad basket of AI-related stocks, comprising a range of semiconductor, data centre, software and power utility companies, was collectively net-bought for eight consecutive trading sessions after 27 January.

Global GDP boost

Additional Goldman Sachs research suggests that the reported development of sophisticated generative AI models at a lower cost by DeepSeek and other Chinese companies may spur faster adoption of AI and help the technology have a larger impact on global economic growth.

The company believes the Chinese breakthrough could raise macroeconomic upside over the medium term if its cost reductions help increase competition around the development of platforms and applications.

“Limited adoption is still the main bottleneck to unlocking AI-related productivity gains and adoption would benefit from competition-induced acceleration in the buildout of AI platforms and applications,” said Joseph Briggs, co-leader of Goldman Sachs Research’s global economics team.

“That said, the near-term adoption impact is probably limited since cost itself is not currently the main barrier to adoption.”