Morgan Stanley's hedge fund clients have moved to a below-market exposure to the broad AI trade for the first time since early 2023, after the longest de-risking streak in more than 15 years. Hedge fund gross cumulative flows have fallen 8% from their June peak, and US long-short net leverage rose 5 percentage points to 51%, mainly due to short covering; gross leverage fell to 207%. Goldman Sachs data shows that in Oct 23–29, hedge funds were net buyers of US stocks for the first time in four weeks, but 73% of the buying went into indices and ETFs, while the tech sector recovered only about 40% of the selling over the previous three weeks. Morgan Stanley argues that low net positioning could leave room for short covering if the market rebounds.
Summary written by Upside AI from the original article. Read the source for full details.
Read the original on Yahoo Finance ↗
Keywords
QQQMorgan Stanleyhedge fundsartificial intelligence
Open a keyword to see other news on the same topic.
Related tickers and likely impact
QQQ
• NeutralInvesco QQQ Trust
Relevance: medium
| Market | US stocks |
|---|---|
| Sector | ETF |
| Close on 11/02/2026 | 681.13 |
| Change that session | -1.36% |
Impact is scored by AI from the headline and may be wrong. It is not investment advice.
Related news
- It's been a painful month for hedge funds. To turn it around, they are shorting U.S. stocks.
In response to losses on popular trades, hedge funds are now aggressively shorting U.S. stocks to try to win back some performance.
- What’s Driving Strong Q3 Momentum for Meta Platforms (META)
Renaissance Investment Management's Large Cap Growth Strategy highlighted Meta Platforms (META) as a strong performer in the third quarter of 2026, a period in which the S&P 500 rose 2.3%. According to the letter, Meta launched its Muse consumer AI agent in September, with an app that offers integrated feeds and can act on the user's behalf, and early App Store results suggest Meta is becoming an early leader in monetizing its AI investments. As of October 26, 2026, META closed at $630.56, a market capitalization of $1.61 trillion, down 4.47% year to date, with a 52-week range of $520.26 to $779.82. At the end of the second quarter, 254 hedge fund portfolios held META, compared with 262 in the prior quarter, and it ranked fifth on a list of 40 most popular hedge fund stocks heading into 2026.
- The Big Three Investment Banks Feed Hedge Funds’ AI-mbitions
The five biggest investment banks have already surpassed last year's record equity trading revenue by about $7 billion, according to a CNBC analysis. Goldman Sachs, JPMorgan Chase and Morgan Stanley account for $52 billion of the top five's $67 billion in equities revenue through September, with Goldman's up 57% to over $19 billion. Looser leverage rules are helping banks do more business with hedge funds seeking financing for their AI bets, and Goldman's equities financing surged 96% last quarter. Hedge fund assets reached $13 trillion this year according to the IMF, up from $4 trillion in 2013, and the IMF warned that leverage could make markets more volatile under stress. Hedge funds pared back some leverage last week, but the collapse of Situational Awareness this summer showed the risks, and the banks that funded those trades were largely able to absorb the hit.
- These 2 Billionaires Like Nvidia (NVDA). Should You Buy the Dip Ahead of Earnings?
Nvidia (NVDA) has slipped after a rough stretch for AI stocks, but two hedge fund billionaires, Ken Fisher and Paul Tudor Jones, held it in the second quarter, and it ranks first on their list of seven AI stocks they bought. The stock fell more than 3% on October 14 over worries about AI debt, after CoreWeave, a heavily indebted cloud firm that rents out Nvidia chips, lost about 25% last week as its bonds sold off and Treasury yields rose above 5% on hotter inflation data. Bulls point to management's expectation of about 70% revenue growth in fiscal 2028, Microsoft Azure's 43% growth, and a rise in hedge funds holding the stock from 275 to 285. Bears note that Nvidia's customers rely on borrowed money, that CoreWeave's bond yields climbed to about 15%, and that Gartner expects most neocloud providers to stop operating independently by 2030. Nvidia owns about 10% of CoreWeave, has agreed to buy unsold capacity through 2032, and provides credit support for an OpenAI data center project in Ohio, so an AI spending slowdown would hit it from both sides.
- An overlooked energy source could solve AI’s power crunch — and these 2 stocks are prime plays
Morgan Stanley says geothermal technology is in the early stages of its own shale revolution. The article frames this as a possible answer to the power shortage facing AI.
- Morgan Stanley issues a fresh warning about AI stocks
Related markets
Latest news
- S&P 500 is looking over the edge of a technical cliff — what happens if it falls off?
A J.P. Morgan strategist says that falling below 7,500 would lead to a dramatic increase in selling pressure and volatility. That could end in a full-blown correction.
- Alphabet's Free Cash Flow Just Turned Negative. Should Investors Sell the Stock Now?
Alphabet reported Q3 revenue up 25% to $127.6 billion, but free cash flow was negative $9.1 billion, the second straight quarter, as $51.4 billion in capital expenditures exceeded $42.3 billion in operating cash flow. The company also built inventory for its custom TPU systems and paid $5.2 billion tied to a 2018 European Commission fine. Trailing 12-month free cash flow remained positive at $19.7 billion, and cash and marketable securities totaled $265.1 billion, including $90.4 billion in equity investments. Operating income rose 30% to $40.6 billion, Google Cloud revenue reached $30.7 billion with a $561 billion backlog, and Search revenue grew 12% to $63.4 billion. The shares fell sharply after the report, and the article highlights monitoring Cloud margins, Search ad growth and free cash flow.
- JPMorganChase Files Form 10-Q for the Quarter Ended September 30, 2026
JPMorgan Chase & Co. (NYSE: JPM) has filed its Form 10-Q with the SEC for the quarter ended September 30, 2026. As of that date, the firm had $5.1 trillion in assets and $372 billion in stockholders' equity. The report is available on the SEC website and the firm's Investor Relations site.
- AMD stock jumps 7% on earnings as data center revenue nearly doubles
AMD reported third-quarter revenue up 45% to $13.38 billion, beating the $13.09 billion LSEG consensus, while adjusted EPS came in at $2.09 versus $1.95 expected. Data center sales nearly doubled and now account for 64% of total revenue, up from 47% a year earlier, driven by demand for server CPUs that power agentic AI apps. The stock rose 7% in extended trading after recent losses. Its PC and gaming segment fell 8% to $3.7 billion, with gaming revenue down 40%. For the fourth quarter, AMD expects about $17 billion in revenue, above the $16.2 billion analyst average.
- Nvidia vs. SK Hynix: Comparing Quarterly Revenue Trajectories
The article compares quarterly revenue trends for Nvidia (NVDA) and SK Hynix (SKHY) over the last 8 quarters. Nvidia's sales have grown rapidly, driven by GPUs for AI data centers, and it forecast sales of about $108 billion in its fiscal third quarter; it also agreed to supply additional GPUs to AWS. SK Hynix's revenue surged this year on soaring demand and high average selling prices for high-bandwidth memory (HBM) used in AI processors, though the company is ramping HBM output, which could eventually push prices down. SK Hynix also began shipping its latest HBM products, showcased tenth-generation flash memory, and faces a suspended IPO for its U.S. unit Solidigm and an ongoing antitrust class action. Its shares have fallen from a 52-week high of $199.87, and Wall Street has been cautious about the stock.
- CrowdStrike Launches AI Agent 'Kill Switch,' Plans to Acquire Fiddler AI
CrowdStrike launched an AI Kill Switch that lets administrators block unauthorized AI agents through a gateway, with direct endpoint termination planned later. The company also agreed to acquire Fiddler AI, reportedly valued at roughly $400 million, to monitor agent behavior and explain automated decisions. The tools aim to give enterprises more control over AI agents that can access corporate systems and act without constant human supervision. The Fiddler deal is expected to close in the fourth quarter of fiscal 2027, which ends January 31, 2027, and will be paid mainly in cash.
Get the briefing on Telegram or Zalo
Join the Upside Telegram channel or Zalo group for the Vietnam stocks and gold briefing at 8:00 and 19:00 (Vietnam time) on trading days, plus a weekly wrap on Saturday morning.