Semiconductor Sector Hit Hard as Hedge Funds Retreat from Tech

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Hedge funds are significantly cutting back their investments in global technology stocks at an unprecedented rate, marking the fastest sell-off in half a year.

This trend, identified by a recent Goldman Sachs report, highlights a notable decrease in U.S. hedge fund involvement in the technology sector, now at its lowest in five years. The semiconductor industry, in particular, has faced the brunt of this divestment.

A blend of macroeconomic factors, including potential tariffs and speculative concerns surrounding artificial intelligence valuations, have fueled apprehensions within the sector. Despite these challenges, Goldman Sachs maintains that the sector still holds promising investment prospects backed by strong fundamentals.

Hedge Funds Retreat from Tech Stocks

The withdrawal of hedge funds from the technology sector has been swift and pronounced, with a 16.4% exposure rate reflecting a significant dip. This retreat is primarily driven by growing macroeconomic uncertainties and a reevaluation of stock valuations amidst the rapid advancements in artificial intelligence.

The semiconductor sector, a critical component of the tech industry, has experienced the most intense selling activity. Concerns about overvaluation and potential economic policies have contributed to this cautious approach, prompting investors to reassess their strategies.

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Nvidia Stock Hit Amid Tech Selloff

NVIDIA Corporation (NASDAQ: NVDA) has mirrored the broader tech trend with notable fluctuations in its stock price. On March 31, 2025, NVDA opened at $105.11 and was trading at $104.46 by mid-morning.

The stock has seen a day low of $103.65 and a day high of $106.01. Despite these short-term movements, NVIDIA’s stock remains significantly above its 52-week low of $75.606, though it is some distance from its 52-week high of $153.13.

The company maintains a market capitalization exceeding $2.5 trillion, with strong financial metrics such as a trailing P/E ratio of 35.53 and a forward P/E ratio of 25.35. Analysts continue to recommend NVDA as a strong buy, with a target mean price of $171.01, reflecting confidence in its long-term potential.

The tech sector’s current state underscores the influence of external factors on investment decisions. While fears of an AI-driven market bubble persist, the overall sentiment remains cautiously optimistic.

Companies like NVIDIA, with robust fundamentals and strategic positioning, are expected to navigate these challenges effectively.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.

About the author

Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird’s US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.





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