Goldman Sachs just ran some ugly numbers on the SaaSPocalypse—and found hedge funds are dumping software and piling into semis
Goldman Sachs has identified a significant shift in hedge fund investments away from software and towards semiconductors. The software industry has seen a decline of 14% year-to-date, while semiconductors have surged by 38%. This trend reflects a broader reassessment of where value in AI is perceived to be, with hedge funds cutting their software exposure to its lowest level since 2019.
- ▪Goldman Sachs reports that hedge funds have reduced their software investments to the lowest weight since 2019.
- ▪Mutual funds are also underweight in software, excluding Microsoft, at levels not seen since 2012.
- ▪Hedge funds are deliberately shifting their portfolios from software to semiconductors, indicating a consensus call rather than panic.
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Wall Street has been debating the SaaSPocalypse for months, if not years. Goldman Sachs studied how hedge funds and mutual funds are approaching the space—and found a major shift in investing.Recommended Video Software & Services as an industry group is down 14% year-to-date and has lost 9% over the last 12 months. Semiconductors & Semi Equipment are up 38% YTD and have surged 104% in the past year. The performance gap is staggering, but it’s a symptom, not the cause. The cause is a fundamental reassessment of where AI value actually accrues — and the answer, increasingly, is not in the application layer. Goldman’s U.S. Weekly Kickstart, published May 22 and drawing on $9 trillion in equity positions at the start of the second quarter of 2026, doesn’t editorialize.
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