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[Tech Stock Crash Impacts Hedge Funds, Software Sector Loses $1.2 Trillion in Market Value] ⑴ The continued plunge in AI software-related tech stocks is triggering a chain reaction in the hedge fund industry. A Goldman Sachs client report shows that stock-picking hedge funds experienced one of their worst three weeks since the first half of 2022, with global long-short strategy funds losing approximately 2% of alpha returns—profits from trading advantages rather than market movements. ⑵ The software sector has become the hardest hit in this round of decline. The S&P 500 Software and Services Index has fallen nearly 18% this year, with its market value shrinking by more than $1.2 trillion. This scale of evaporation has directly impacted hedge funds heavily invested in software stocks. ⑶ Hedge funds are accelerating their withdrawal from software stocks. Goldman Sachs block trader data shows that speculative positions involving US software stocks have fallen to a record low. Traders continue to short software stocks while shifting funds to microchip and electronic component manufacturers, creating a clear sector rotation. ⑷ Overall, hedge fund positions are showing a net selling trend. This month saw the fastest net selling of US stocks since March 2025. This selling pace reflects leveraged funds actively reducing their risk exposure amid a decline led by tech stocks. (5) The consumer sector also experienced selling pressure. Goldman Sachs stated that hedge funds have turned bearish on US consumer companies, covering both consumer staples and discretionary sectors that benefit from consumer spending. Expectations of a slowdown in consumption are being priced in by funds. (6) Healthcare stocks have become a safe haven. Data shows that as of February 19, US healthcare stocks were the most bought sector this year. With both technology and consumer sectors under pressure, defensive attributes have become a priority for hedge funds.