Hedge funds offloaded technology stocks at the fastest pace in six months last week, with selling activity reaching a five-year high, according to a report by Reuters citing data from the prime brokerage division at Goldman Sachs.

The retreat comes as markets brace for the 2 April tariff deadline set by US President Donald Trump, raising concerns over economic instability and potential retaliatory measures from trade partners.

In a note to clients seen by Reuters, Goldman Sachs revealed that hedge funds shed long positions and exited short bets in the information technology sector, which includes the Magnificent Seven tech stocks. The bank’s prime brokerage desk, which tracks hedge fund trading activity, identified tech as “by far the most net sold” sector last week.

Tech stocks accounted for 75% of hedge fund selling, with a particular focus on companies producing AI-related hardware, Goldman noted.

The move away from tech stocks has coincided with an increase in short selling, according to a separate note from Morgan Stanley. The report highlighted Nvidia (NVDA), Advanced Micro Devices (AMD), and Tesla (TSLA) as the top three shorted stocks among hedge funds on Wednesday.

Analysts at Edmond de Rothschild linked the tech stock selloff to concerns over upcoming copper tariffs, which are expected to impact semiconductor and AI-related hardware manufacturers.

Total hedge fund exposure to tech stocks has now fallen to a five-year low, Goldman reported. While hedge funds had previously bought into tech in mid-March, the past week saw a sharp reversal, driven by escalating trade tensions and fears of a potential recession.

Meanwhile, JPMorgan suggested that strong retail investor buying activity may have also pressured hedge fund positioning in the sector.