Fastest pace in over five years… hedge funds sell AI stocks

Goldman Sachs expects the net supply of U.S. equities to increase in 2027 by the largest margin since 2000, as a wave of large IPOs adds new shares while buybacks weaken, forcing the market to absorb a heavier load of paper. Tony Pasquariello, who heads the bank's global hedge fund business, said in a weekly note that the S&P 500 may climb once more before a turning point but that 2027 returns will be lower, leaving room for a year-end rally while warning on next year's performance. The call matters because it frames the coming supply-demand imbalance as a structural headwind rather than a short-term trading signal. Investors should watch the pace of large IPO issuance and the trajectory of corporate buybacks, the two variables Goldman identifies as driving the net-supply increase.