Goldman Sachs: Hedge funds have halted AI investments
Following the announcement of the Stargate project, in which Trump pledged $500 billion in investment to the AI industry, the Chinese company DeepSeek introduced its free-to-use AI engine, R1. These developments have led hedge funds to halt their investments in the US.
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Goldman Sachs has reported that hedge funds have frozen their investments in the artificial intelligence industry due to the Chinese AI company DeepSeek. According to Sachs, the funds will pause their investments for a period to observe the impact of DeepSeek on the market. Goldman also notes that Donald Trump's statements regarding artificial intelligence have been influential in the hedge funds' decisions to halt investments.
The NASDAQ stock exchange in the US reported on Monday (January 27) that futures trading had declined and technology stocks had fallen. The growing popularity of China's low-cost AI model is being cited as the cause of the decline. On the other hand, experts suggest that investors' confidence in the profitability of options offered by the US has been shaken.
Reuters reported on the event, claiming to have accessed the data through its sources at Goldman. Prime brokerage desks at banks can access transaction flow data when they lend to hedge funds.
Last week, hedge funds began to avoid 'placing bets' on tech stocks. According to Goldman's leaked 'prime brokerage desk' data, hedge funds began reducing their investments between January 17 and 24.
If Goldman Sachs' reports are accurate, a new 'bull rally' could be experienced in AI stocks in the long term. A bull rally refers to periods when markets enter 'sudden upward trends'.
THE STARGATE AND DEEPSEEK EFFECT
President Donald Trump's Stargate project, in which he pledged $500 billion in investment to the AI industry, may have caused the hedge funds' decisions to sell and freeze investments. Trump had stated that the industry would be strengthened by the state.
Hedge funds are also continuing to sell US stocks associated with the technology industry. It was stated that the companies whose shares were sold include institutions that provide infrastructure services to the AI industry.
Among these companies are partnerships that build data centers that 'feed' AI models and charging stations for electric vehicles.
Goldman noted that hedge funds may continue to sell AI stocks that have increased in value over the last year due to the gains they have achieved.
WHAT IS A HEDGE FUND?
Hedge funds are private investment vehicles established for investors seeking high returns. They generally cater to large investors and institutional capital. These funds aim to diversify risk by trading in different asset classes such as stocks, bonds, currencies, and derivatives.
The funds use more flexible strategies compared to traditional investment vehicles. They evaluate opportunities in the markets through methods such as short selling, leveraged transactions, and arbitrage. However, they may not be suitable for small investors due to their high risk and high return potential.
These funds are usually managed by experienced portfolio managers, and additional fees are requested to be paid to the managers based on their performance. Hedge funds aim to achieve high earnings by taking advantage of fluctuations in the markets.