Goldman Sachs: Strong earnings reports drive hedge funds to become "big buyers" of U.S. stocks, making significant purchases of technology stocks
Goldman Sachs report shows that hedge funds became major buyers of U.S. stocks after strong earnings reports, changing their bearish stance. Last week, hedge funds purchased U.S. stocks at the fastest pace, with net buying reaching a three-year high. Trading in the information technology sector was active, with buying volume hitting the highest level since December 2021. Analysts pointed out that views on artificial intelligence have become more constructive, market sentiment has shifted, and corporate earnings performance has boosted confidence
According to the Zhitong Finance APP, hedge funds became major buyers of U.S. stocks last week, changing their previously bearish stance after stronger-than-expected earnings reports were released. A brokerage report from Goldman Sachs for the week ending February 7 showed that after five consecutive weeks of net selling, hedge funds rushed to buy U.S. stocks at the fastest pace since November of last year, resulting in the highest net buying volume for individual stocks in over three years.
Trading activity in the information technology sector was the most active, with hedge funds' buying volume in this sector reaching its highest level since December 2021. This marked their second-largest buying spree in nearly five years, during which they covered short positions and increased long positions. Software and semiconductor stocks led the inflow of funds.
Vincent Lin, co-head of insights and analysis at Goldman Sachs, wrote in a report to clients that these activities "indicate that hedge funds have become more constructive on artificial intelligence following the sell-off triggered by DeepSeek on January 27 and are starting to lean towards AI themes."
Previously, traders were trying to assess the potential impact of President Donald Trump's tariff plans, compounded by the release of an AI tool by the Chinese startup DeepSeek, which sent shockwaves through U.S. tech stocks and put the stock market in a volatile period. However, market sentiment has now shifted. Additionally, the recent earnings disclosures from U.S. companies have also boosted market confidence.
John Flood, a partner at Goldman Sachs and head of U.S. equity sales trading, wrote: "In an uncertain macro backdrop, micro data has shown another strong earnings season."