Hedge funds suffer worst day in a year following AI stock sell-off
Hedge funds saw their worst day in a year Wednesday as an AI sell-off hit tech stocks. Goldman Sachs reported losses as investors moved into defensive shares.
Insights:
Stock-focused hedge funds in the US 
US suffered their worst single-day performance in nearly a year today, February 5, 2026, as a tech-driven selloff erased value from crowded long positions. The market turbulence was primarily triggered by the introduction of a new legal AI tool built on the Anthropics Claude large language model. This sudden shift resulted in losses of up to 2.78% for certain hedge funds, while multi-strategy hedge funds saw a decline of approximately 1.9%.
US suffered their worst single-day performance in nearly a year today, February 5, 2026, as a tech-driven selloff erased value from crowded long positions. The market turbulence was primarily triggered by the introduction of a new legal AI tool built on the Anthropics Claude large language model. This sudden shift resulted in losses of up to 2.78% for certain hedge funds, while multi-strategy hedge funds saw a decline of approximately 1.9%.The scale of this one-day hit marks the largest single-day loss for these funds since April 9 of the prior year. The selloff, which rippled across global markets, impacted a wide range of institutional players, including both systematic stock traders and fundamental stock-picking funds. Market data analyzed by The Goldman Sachs Group, Inc. indicated that the sharp decline in technology companies forced a rapid rotation into more defensive segments of the market.
