Wall Street Banks Demand Hedge Funds Post More Collateral Amid AI Stock Plunge

Goldman Sachs and JPMorgan issue margin calls as AI stocks drop sharply. Nasdaq 100 down 10% from June peak, triggering collateral demands for leveraged positions.

Woofun AI reports that Wall Street banks including Goldman Sachs and JPMorgan have instructed certain hedge funds to provide additional collateral to sustain leverage levels amid a two-week decline in AI concept stocks. Margin call notices target funds with high industry concentration, with some requiring automatic execution of risk controls triggered by market volatility.

Data indicates the Nasdaq 100 has retreated 10% from its early June peak, while SanDisk and Intel have fallen 53% and 39% from yearly highs, respectively. The Philadelphia Semiconductor Index dropped approximately 25% since late June. Goldman Sachs noted that hedge fund leverage reached its highest growth since 2016 in the first five months of the year. As of Tuesday noon, long-short strategy funds fell 1.3% and multi-strategy funds declined 1.7%, marking significant single-day losses. Despite this, hedge funds maintain an average return of over 10% for the year. Goldman Sachs disclosed that 16% of its prime brokerage risk exposure was tied to AI semiconductor stocks as of June 30th.