Hedge funds sold tech stocks at their fastest pace in two years during last Thursday’s rout, Goldman Sachs’ Tony Pasquariello told clients, Bloomberg reported. The Nasdaq 100 fell 2.9% that day. He expects the bull market to continue, but with less punch, as Microsoft, Alphabet and Amazon report this week.

Hedge funds sold tech stocks at the fastest pace in two years last Thursday, during Wall Street’s worst sell-off since July, Goldman Sachs’ Tony Pasquariello told clients, Bloomberg reported. He said the selling casts serious doubt on how much investors still believe in the AI trade.

The Nasdaq 100 fell 2.9% that day, before rising 1% on Monday. A Goldman index of hedge funds’ most popular stocks had its worst day since 2011, Forbes reported.

“It felt like the market did cut into some bone,” wrote Pasquariello, who runs hedge fund coverage at Goldman.

The S&P 500 has barely moved for three months, but that hides a steady slide in AI stocks since the end of June, he wrote. Investors piled into AI in the first half and are now asking hard questions about whether there will be enough power and money for all the planned spending.

The doubts have been building for months. In July, TSMC’s shares fell 4% despite record revenue, and one AI-focused hedge fund was forced out of its bets. In September, calls to slow AI development knocked chip stocks and sent SoftBank down as much as 13%.

Pasquariello is not urging clients to take on more risk. He said he has “no issue with swimming a bit closer to shore right now”, with Microsoft and Alphabet reporting results on Wednesday and Amazon on Thursday. In their last earnings round, investors rewarded cloud growth and punished heavy spending.

“The bull market should live on, but it will pack less punch and be messier along the way,” he wrote. Goldman expects growth in S&P 500 company earnings to slow to 18% next year from 29% in 2026.