- Hedge funds that were hooked on tech stocks before Nvidia’s profits are bleeding money.
- The setback has triggered net selling in tech sector stocks since Nvidia’s earnings.
- Goldman Sachs said the Magnificent Seven’s performance will begin to depend on broader economic indicators.
Nvidia’s big financial results last week continue to see big outflows from the tech sector among hedge funds looking to take some chips off the table after piling on chips ahead of the chipmaker’s earnings call. .
Goldman Sachs’ prime brokerage division said hedge funds were selling tech stocks at the fastest pace in seven months after a six-week buying period leading up to Nvidia’s earnings report last Wednesday. Stated.
This marks the fourth consecutive session of net sales in the AI-powered technology space since last Thursday, a day after NVIDIA sent investors into a frenzy, increasing its market capitalization by $267 billion in a single trading session. It happened.
“Despite last week’s ‘good vibes’ and solid NVDA earnings on Wednesday, NDX has lost ground in four of the past five sessions as price movements and activity levels have started to show more bidirectional movement for NDX. “The decline has raised tensions about the sustainability of momentum from here,” Goldman’s Peter Callaghan wrote in a note.
Hedge fund investors are shifting their focus to other blue-chip stocks, the paper said, with money moving away from tech deals and into real estate, consumer staples and materials.
Callahan cautioned that now that the Magnificent Seven have finished their earnings season, their performance should begin to be affected by broader economic indicators, such as inflation statistics and changes in the Fed’s interest rate schedule.
Still, market confidence in tech stocks remains strong, with Nvidia alone accounting for 22% of the S&P’s weekly gain last week. Although put-call skew, a key measure of investor anxiety, declined, Nvidia’s retail trading also rose to the 99.96th percentile of average weekly notional trade value over the past five years.