Leopold Aschenbrenner’s Situational Awareness hedge fund has been forced to sell all of its public stock holdings after steep losses in July, marking a dramatic reversal for the once-highflying AI-focused fund that had grown to $45 billion at the start of the month, according to multiple sources including CNBC and the Wall Street Journal.
Ken Griffin’s Citadel hedge fund agreed to buy the bulk of Situational Awareness’s public equity portfolio in a block trade, according to people familiar with the deal. The fund’s assets have plummeted to roughly $10 billion after the sale, down more than 75% from their July peak.
Situational Awareness had posted extraordinary returns through June 2026, gaining approximately 439% after fees in the first half of the year, according to Yahoo Finance and the Financial Times. The fund, founded by 24-year-old former OpenAI researcher Aschenbrenner, had become one of the fastest-growing hedge funds in years, with investors closely tracking its leveraged bets on AI infrastructure companies.
The fund’s largest holdings — Nebius Group, SanDisk, Micron, and CoreWeave — all declined more than 35% in July as investors soured on AI stocks amid concerns about massive capital expenditures and rising borrowing costs, according to CNBC. Situational Awareness had also held significant positions in SK Hynix, the South Korean memory-chip maker.
The fund faced additional pressure from short positions in software companies such as Adobe that moved sharply against it, according to CNBC. Prime brokers including Bank of America, Goldman Sachs, and JPMorgan Chase worked with the fund to meet margin requirements, marketing holdings for sale before Thursday’s start of trading, the sources said.
Citadel purchased only the portion of Situational Awareness’s public stock portfolio that was financed with borrowed money, while the fund retained holdings funded by client capital, according to the Wall Street Journal. The firm retained its private investments, including a stake in AI company Anthropic, though a spokesman disputed reports that it had been marketing that stake.
The collapse of Situational Awareness reflects broader turmoil in the AI trade. Semiconductor stocks closed their worst month in nearly four years in July, with the Philadelphia Semiconductor Index dropping around 25% since late June, according to searches and market data. The selloff has prompted hedge funds and other investors to cut exposure to AI-related bets after months of aggressive accumulation.
Aschenbrenner had built the fund around the thesis that increasingly powerful AI systems would require vast expansions in chips, memory, data centers, and electricity generation — an investment narrative that drove extraordinary gains through the first half of 2026. The sudden reversal in July has become an early test of whether that thesis can withstand market skepticism about the pace and profitability of AI infrastructure spending.
Sources
- CNBC — Aschenbrenner’s fund losses, margin calls from prime brokers, specific holdings and their declines, short positions in software stocks
- Wall Street Journal — Citadel’s purchase of the public portfolio, fund’s borrowing structure, holdings composition
- Bloomberg — Fund assets dropping to $10 billion, Citadel deal details
- Yahoo Finance — Fund’s 439% return through June 2026
- Financial Times — Fund’s 439% year-to-date performance through June
- Market data sources — Semiconductor sector performance, Philadelphia Semiconductor Index decline
