Technology sector optimism has catapulted the SPDR S&P 500 ETF Trust (NYSE:SPY) to all-time highs in 2024 even amid tough macroeconomic conditions and geopolitical uncertainty. Despite the rally, there are mixed signals on Wall Street.

The Data: A post on X relayed data from Goldman Sachs.

This is interesting:

Hedge funds have been selling US tech stocks at the fastest pace in at least 7 years this month, according to Goldman Sachs.

Semiconductor stocks have been the most heavily sold, followed by software and internet stocks.

This comes after Nasdaq 100 has… pic.twitter.com/FIaVLre7qG
— The Kobeissi Letter (@KobeissiLetter) June 30, 2024

June 2024 was the largest sell-off of technology stocks by hedge funds in the past seven years. Funds took profits on semiconductor stocks, the most followed by software and internet companies.

Hedge funds previously had large sell-offs during the latter half of 2023 before rejoining the tech trade throughout the winter and spring of 2024.

Why it Matters: The S&P 500’s rally in 2024 can largely be attributed to the meteoric rise of semiconductor, AI and AI-adjacent companies. Tech stocks are currently trading at all-time high valuations relative to earnings, which could indicate a potential top for the AI play. Companies must bring in historic earnings to justify their valuations.

Meanwhile, many signs point to AI being a legitimate value-add for businesses and consumers. Many analysts, including those from Goldman Sachs, have cast doubt on whether AI’s value justifies its astounding investment costs.

Although many experts point to the AI play’s rally as quixotic, investors clearly beg to differ — the iShares Semiconductor ETF (NASDAQ:SOXX) is up more than 36% in 2024, approaching all-time highs after a drawdown in late June.

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Photo: Shutterstock

Are Hedge Funds Taking Profits On Tech? June Sell-Off Is Biggest In Years