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Posted on 07/30/2026 6:30:55 AM PDT by Red Badger
Key Points
* Leopold Aschenbrenner’s hedge fund is unwinding trades and may be forced to liquidate assets, according to people familiar with the matter.
* Situational Awareness has posted big losses in recent weeks from declines in AI infrastructure investments like SK Hynix, the people said.
* Aschenbrenner launched the fund after leaving OpenAI in 2024 and quickly became one of the most watched figures in AI investing because of eye-popping returns.
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The $24 billion hedge fund founded by former OpenAI researcher Leopold Aschenbrenner is unwinding many of its trades after big losses on artificial intelligence stocks and a bad bet against software stocks left it scrambling to raise cash, according to people familiar with the matter.
Situational Awareness has sustained significant losses in recent weeks as its portfolio of AI infrastructure investments such as SK Hynix declined while short positions in software companies such as Adobe moved sharply against it, the people said.
Several of the firm’s prime brokers — including Bank of America, Goldman Sachs and JPMorgan Chase —have been working with the fund as it seeks to meet margin requirements or reduce positions in an orderly fashion, according to people familiar with the discussions. The brokers have been marketing a group of the firm’s holdings on both the long and short side for sale prior to today’s start of trading, according to people familiar with the situation.
The situation remained fluid. It couldn’t be determined whether the firm was satisfying its margin calls through negotiated asset sales or whether a broader liquidation of its portfolio was underway.
The fund has also been attempting to raise liquidity by marketing stakes in privately held companies, according to people familiar with the matter. Those efforts include an investment in Anthropic. The size of the position being offered couldn’t be determined, though people familiar with the process said prospective buyers had expressed interest in purchasing part or all of the stake.
Situational Awareness did not immediately respond to requests for comment.
AI stock impact? The turmoil is an early and potentially significant test of the investment thesis that made Aschenbrenner one of the most closely watched figures in the AI trade. The 25-year-old built the firm around the idea that increasingly powerful AI systems would require a vast expansion of chips, memory, data centers and electricity generation. A forced unwinding by the fund could add pressure to some of the same companies that benefited most from investor enthusiasm for that build-out.
The fund’s largest holdings at the end of the first quarter included Nebius Group , Sandisk , Micron and CoreWeave , according to filings. All four of those stocks are down more than 35% this month.
Aschenbrenner became prominent in technology and investing circles after publishing a series of essays in 2024 arguing that rapid advances in artificial intelligence would require an enormous expansion of computing power, advanced semiconductors, memory and energy infrastructure. Those ideas became the intellectual foundation for Situational Awareness after he left OpenAI.
Aschenbrenner graduated from Columbia University as valedictorian at the age of 19 before joining OpenAI’s Superalignment team. He was fired in 2024 over what the company described as an improper disclosure of internal information. Aschenbrenner has disputed that characterization, saying he shared a largely nonconfidential planning document with outside researchers for feedback, and has said his dismissal followed tensions over warnings he raised about OpenAI’s security practices. OpenAI has said those concerns were unrelated to his departure.
Aschenbrenner is engaged to Avital Balwit, the chief of staff for Anthropic CEO Dario Amodei, according to an October profile in Fortune, which cited a Situational Awareness LP spokesperson.
The size of the fund’s losses, the amount it was seeking to raise and the extent of any asset sales couldn’t immediately be determined.
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POP THAT AI BUBBLE , PLEASE
Is it wrong to read this as a feel-good story?
Soon they’ll have tons of data centers with no data to suck up ,LOL
In ten years those data centers will be converted into homeless shelters.
I oppose data centers, but not for any environmental reasons.
Whose data is being collected, stored, searched and manipulated within those cavernous confines?
If a company needs a ‘data center’ for some reason, it should be a small and innocuous addition to their ‘campus’, not a gargantuan industrial scale complex that takes up hundreds of acres, visible from low earth orbit, and is a blight on the landscape.
Here’s the thing about holding a boring, large cap index fund. You’ll never get to brag about the fund’s outsized profits at parties.
But on the other hand, you don’t have to worry about the fund collapsing.
Boring is good.
For me, anyway.
This may be it, with Leopold pulling back now.
Love it! Absolute CLASSIC!
“One of the world’s biggest memory-chip makers reported a record $64 billion quarterly profit on Wednesday—and its stock price still fell nearly 10%.”
https://finance.yahoo.com/markets/stocks/articles/even-64-billion-quarterly-profit-103300938.html
I suspect the real fear is overinvestment in the AI sector.
“you don’t have to worry about the fund collapsing”
Change happens at a fast rate nowadays.
Perhaps brokers need to gradually place over say 100 days additional restrictions on margins of tech company holdings.
Tech companies are riskier than food & beverage companies.
Purchase margins might gradually be limited to 25% while forced sale margins remain untouched.
Margin interest rates might vary by specific account risk to gently encourage customer risk reduction activity.
Those are merely suggestions.
Disgorging has to happen before a bottom is in
I guess only if you are heavily invested in the AI gold rush like a moth to a flame.
Same here.
How is that grossly inflated SpaceX working out? I know, give it time.
I rifled through a whole lot of material this weekend using AI but only the free stuff. I took none of it as gospel and only for direction as a research assistant. Not sure how much, if anything, I would pay for it though.
Data centers have to be becoming like my catch-all barn, a place for what seems like harmless stuff I may use someday that eventually just takes up space and becomes worthless even to me.
The dead end marketing leads AI or something persists in long after you have made your purchase or lost interest in confound me for their uselessness to whoever pays for them.
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