AI-Focused Hedge Fund Loses $35 Billion After Rapid Decline

Leopold Aschenbrenner's hedge fund, Situational Awareness, saw assets plunge by about $35 billion over a two-week period in late July after a sharp reversal in AI-related stocks. The fund had built a highly concentrated portfolio that was heavily long on AI hardware and data-center companies such as CoreWeave, Nebius, Micron Technology and VanEck Semiconductor, while shorting software firms including Salesforce and Intuit. To amplify returns, Aschenbrenner financed purchases with significant debt.

The strategy initially attracted attention for its rapid gains; a June report noted a 1,000 percent increase since the fund’s inception and a 270 percent rise in the first five months of 2026. Early backers reportedly included technology entrepreneurs and AI executives, and the fund’s assets peaked at about $45 billion, according to market data.

However, when AI stocks fell more than 30 percent and the shorted software stocks rose, the fund’s leveraged positions amplified losses, leading to the swift collapse.

"For the future, let’s file the phrase ‘You never go full Kelly’ under the heading ‘Things of which you should be situationally aware,’" hedge-fund manager Cliff Asness said in an email response.

Industry observers noted that the fund’s approach deviated from traditional hedging practices, exposing it to extreme market risk.