Several major hedge funds have experienced significant investment losses following a global stock market sell-off led by technology companies.

The decline has forced some investment managers to reduce their exposure to risky assets, review their portfolios and consider cutting staff as they attempt to protect their businesses.

According to Reuters, technology-focused equity long-short hedge funds recorded losses exceeding four per cent during Thursday’s trading session.

The decline erased much of the gains these funds had accumulated earlier in the year, reducing their average performance to approximately break-even.

One of the affected investment firms is Walleye Capital, a New York-based hedge fund managing approximately $17 billion in assets.

The company reportedly informed investors that it planned to reduce the size of its internal equity long-short business and significantly cut part of its investment team.

The market downturn has also affected other multi-strategy investment firms, several of which have reportedly reduced borrowing, lowered investment risks and dismissed underperforming teams.

Investors are becoming increasingly cautious about companies whose valuations depend heavily on expectations of future artificial intelligence growth.

The situation highlights the risks associated with concentrated investments in rapidly growing technology sectors.

Although artificial intelligence continues to attract substantial global investment, the recent market turbulence demonstrates that investor confidence can change quickly when concerns emerge about company valuations, borrowing costs and the profitability of future investments.