Leopold Aschenbrenner’s AI Fund Loses 67% in July After Leverage-Fueled Meltdown

Situational Awareness, the AI-focused hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, lost 67% in July after leveraged bets on AI infrastructure stocks turned sharply against it. The fund was forced to sell the bulk of its roughly $16 billion public equity portfolio to Ken Griffin’s Citadel in an emergency transaction completed within 24 hours, as rising margin requirements from lenders including Goldman Sachs, JPMorgan, Bank of America, and Citi pushed it toward disposal rather than a larger forced sell-off.

From Meteoric Rise to Sharp Reversal

Launched in early 2025 with under $1 billion, the fund grew to $45 billion by early July after posting a 439% return through aggressive leverage on companies tied to AI infrastructure, including SanDisk, SK Hynix, and CoreWeave. When AI-related stocks corrected sharply, those same leveraged positions accelerated the fund’s losses. Despite the drawdown, the fund remains up about 80% for the year and has kept its stake in Anthropic.

Aschenbrenner Vows to Learn From the Setback

In a letter to investors, Aschenbrenner acknowledged the fund “let down” its backers this month but said the episode is not over, framing the current pullback as a valuation reset rather than a shift in AI’s long-term prospects. He is inviting investors to add capital before August 1 and pointed to potential catalysts ahead, including a possible Anthropic IPO.