Chinese hedge funds warn of AI spending risks as trades take a hit
Chinese hedge funds that built substantial positions around the AI boom are largely maintaining their exposure despite a sharp reversal in performance, although several managers are warning that the investment cycle faces growing risks, according to a report by Bloomberg. Investor letters from seven Chinese hedge funds reviewed by Bloomberg show that managers remain broadly constructive on AI,…
Chinese hedge funds that invested heavily in the AI boom continue to hold their positions despite a significant downturn in performance. According to Bloomberg, seven Chinese hedge funds reported that managers remain generally optimistic about AI, even though they acknowledge growing risks in the investment cycle. Shanghai Chaser Asset Management believes the July sell-off marked the bottom of the current correction, while Intewise Capital Management's chairman, Liu Xiaolong, suggests the correction may be nearing an end.
The funds also express concerns about the immense capital required to sustain the AI boom and its potential impact on employment. Hunjin Capital estimates that AI companies may need $700 billion in annual recurring revenue next year to justify current spending levels, which would require AI technology to replace around four million coding-related jobs.
Meanwhile, Beijing Ren Bridge Asset Management analyzed Nvidia's outlook following the chipmaker's strong guidance, comparing it to Microsoft's experience with Windows Vista. Ren Bridge concluded that the subsequent cycle could weigh on Nvidia's share price. Four of the seven funds maintained an AI investment bias before the July sell-off, while three that largely avoided AI hardware were down more than 8% during the same period.
The divergence highlights how AI positioning has affected returns among China's largest hedge funds this year.
Written by urgent.news from Hedgeweek's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
