Aschenbrenner’s fund, Situational Awareness, massively grew to as big as $45 billion at the beginning of July before big losses took hold, CNBC reported citing sources. The fund began to see massive losses in recent weeks as its heavyweight AI holdings like SK Hynix sharply crashed, while its short positions in software companies such as Adobe moved sharply against it, the report added.
Situational Awareness’ prime brokers including Bank of America, Goldman Sachs and JPMorgan Chase have been rushing to raise cash in order to meet margin requirements, CNBC further reported, citing people familiar with the matter.
Situational Awareness’ sharp downfall almost reflects the sharp upswings and downswings of the AI trade. The 24-year-old built the firm around the idea that growing number of powerful AI systems would require a vast expansion of chips, memory, data centers and electricity generation. The fund’s largest holdings, including Nebius Group, SanDisk, Micron and CoreWeave are down more than 35% this month.
Aschenbrenner tells clients, ‘We let you down’
This comes at a crucial time for Leopold Aschenbrenner, who is set to marry his fiancee — the chief of staff to the CEO at Anthropic. While Situational Awareness has lost about 67% so far in July, the hedge fund is still up around 80% on the year, Bloomberg reported. “We let you down this month,” Aschenbrenner wrote in the letter.
Aschenbrenner said he takes full responsibility for the fall, but attributed some of the reasoning for July’s plummet on short sellers, who targeted the shares he owned, he wrote in the client letter. He also vowed to run his public stock portfolio without leverage “while we draw the lessons from these developments”, Bloomberg reported. “My core promise to you is that we will not waste the opportunity to learn from these events,” he wrote.
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Also read | Apple set to lose nearly $500 billion in value after weak forecastGerman-born Aschenbrenner graduated with a B.A. in economics and mathematics statistics in 2021 from the Columbia University. Before joining OpenAI in 2023, he helped run the FTX Future Fund, a philanthropic arm of Sam Bankman-Fried’s crypto empire that fell apart in a multibillion-dollar financial fraud.
However, he was fired from the AI startup in 2024. The company said he was let go for leaking information, while he claims he raised the alarm over lack of interest in stopping foreign adversarial attacks.
Since last year, global stock markets saw an increasing frenzy around AI, with hyperscalers hiking their investments in the technology. The increased optimism sparked a sharp rally in the AI stocks, before things began to go down. Analysts soon began sounding the alarm over the massive AI spending and rising debt of the tech giants, questioning if they will actually bear fruit in the future. The worries sparked a sharp selloff in the tech stocks.
Also read | Peter Lynch does not like the AI trade; here’s why he says ‘Know what you own’
(With inputs from agencies)
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