Situational Awareness was built on an unapologetically bullish wager: that the AI boom would demand vast new spending on chips, computing power, memory and energy. Former OpenAI researcher Leopold Aschenbrenner launched the fund in 2024 despite having no previous trading experience, and it quickly assembled a concentrated portfolio of AI-linked stocks.¹

The bet initially looked inspired. The fund returned 439% through June, according to reports cited by TechCrunch, as assets swelled to as much as $45 billion at their peak.² But the trade was amplified by borrowed money, leaving the eight-person firm exposed when AI infrastructure stocks began falling. Lenders including Goldman Sachs and Bank of America had extended tens of billions of dollars in financing, allowing what the New York Times described as a "giant one-way bet on artificial intelligence stocks."³

By late July, Aschenbrenner was still arguing that the rout represented one of the best buying opportunities since early 2025, and asked investors for new commitments. That appeal failed to produce the capital the fund had hoped for, Bloomberg reported via TechCrunch.² Shares in holdings including SK Hynix, Sandisk, Bloom Energy and Nebius had dropped more than 30% over the preceding month.²

The unwind then accelerated. Situational Awareness sold its entire public-equities portfolio to Ken Griffin’s Citadel, Axios reported, amid the wider selloff in AI stocks and especially chipmakers.¹ Other accounts described the transaction as a sale of the bulk of the public holdings, undertaken so the fund could repay lenders.³

For regulators, the episode is less a quirky hedge-fund blowup than a market warning. Hedge funds had borrowed nearly $3.7 trillion from banks by midyear, more than triple the level at the pandemic’s start, according to Treasury Department data cited by the Times.³ Citadel, however, appears to be reading the same wreckage differently: it already owned similar AI infrastructure bets and has the capital to wait for a recovery.² Situational Awareness retains private investments, including an Anthropic stake reportedly valued at $5 billion—a possible cushion, but not a substitute for the public-market bet it was forced to unwind.²