Hedge funds are not waiting around for Nvidia's results Wednesday night. They dumped stocks in record numbers last week, with most of the selling in the technology sector as chip stocks sold off aggressively, according to Bank of America. In total, hedge funds sold a $4.6 billion in single stocks — the largest amount sold outright, ever. In tech alone, they got rid of $3.01 billion worth in stock and ETFs. That aggressive selling may have been a driving force in the chipmakers' struggles late last week. The PHLX Semiconductor Index tumbled 4% on Friday — its worst day since March 30. The declines continued Monday, with .SOX falling 2.5%. These moves were executed ahead of Nvidia's earnings report, the biggest of the season. Expectations for the chipmaker's quarterly figures are sky high. Analysts on average expect the company's bottom line more than doubled from the year-earlier period, per LSEG. As for revenue, they forecast a nearly 80% increase. "There's a short-term, long-term dynamic, where in the short-term, I think the numbers will be amazingly boring as usual," said John Belton, portfolio manager at Gabelli Funds. "Nvidia has been consistently blowing away numbers, especially the last couple of earnings. The market has traded with jitters around Nvidia because the long-term is the question." "Nvidia is the beneficiary of all this AI capex, and I think a question that will play out over the next couple of years is if the capex is generating a return," he said. More broadly, investors may be wondering if the recent decline in tech and chips is a buying opportunity, or if hedge funds are positioning for longer-term weakness in the space.
