One of the most closely watched bets on artificial intelligence has come apart in a matter of days.
Situational Awareness, the AI-focused hedge fund run by former OpenAI researcher Leopold Aschenbrenner, saw its portfolio value fall 67% in July after steep losses on AI stocks, according to Reuters, which cited a letter sent to investors on Thursday. The Wall Street Journal reported the same 67% July decline in an exclusive on the AI stock rout.
CNBC framed the collapse in terms of how fast it happened, reporting that Aschenbrenner built a $45 billion AI hedge fund and lost most of it in days. CNBC describes the drop as a dramatic decline this week in the AI-focused fund.
The details matter because of who is involved. Aschenbrenner is a former OpenAI researcher who turned a thesis about AI's trajectory into a very large, very concentrated wager on the companies expected to benefit from it. That is roughly the opposite of a diversified fund: when the AI trade works, gains compound quickly; when it reverses, there is nowhere to hide. A 67% drawdown in a single month is the arithmetic of that concentration.
The sources here report the size of the loss and the timing, not the specific positions, the identity of the investors, or what happens to the fund next. Reuters attributes its figure to the investor letter rather than to public filings, and the fund itself has not, in these reports, laid out a recovery plan.
Why it matters: when a fund built explicitly on the AI thesis loses most of its value in weeks, it is a public stress test of how much of the AI trade is conviction and how much is momentum — and a reminder that the same story driving markets up can drive them down just as fast.