NEW YORK – Leopold Aschenbrenner walked into July with one of the most celebrated records in the hedge fund industry. He exited the month selling most of what he had built to Ken Griffin’s Citadel.
Situational Awareness, the artificial intelligence-focused fund Aschenbrenner launched in 2024 at age 23, lost 67 percent of its value during July’s AI stock rout, according to reporting by the Wall Street Journal. The forced sale of its public equity portfolio to Citadel reduced the fund’s assets under management from roughly $20 billion to approximately $10 billion, a level that substantially exceeds what it held at the start of the year but erases months of compounded gains.
Aschenbrenner is 25. He graduated as valedictorian of Columbia University at 19 and joined OpenAI, where he became a closely watched analyst before the company dismissed him over what it described as the improper disclosure of internal information. The circumstances of that dismissal, which Aschenbrenner disputed, became public in 2024 and sharpened attention on his subsequent decision to launch a hedge fund with no prior trading experience.
That fund produced returns of 439 percent for the year through June 2026, a figure that attracted institutional credibility and significant capital. Its thesis was explicit: the companies and semiconductors driving AI adoption would generate outsized and durable returns for investors willing to hold concentrated positions without hedging them down. The fund used leverage, borrowing against its portfolio to amplify exposure. The strategy worked until it did not.
July’s AI sector selloff hit the fund’s concentrated positions with compounded force. Stocks including SK Hynix and Sandisk, memory chip producers supplying the AI data center buildouts anchoring Nvidia’s Vera server infrastructure ramp, fell more than 30 percent in a single month. Bloom Energy, a clean energy developer with AI-adjacent infrastructure exposure, and Nebius Group, a neocloud provider, posted similar declines. With leverage amplifying both the upside of the prior 12 months and the downside of July, the losses were structurally difficult to absorb.
Citadel, the multi-strategy firm run by Griffin, agreed to purchase the majority of Situational Awareness’s public stock portfolio. The terms of the transaction were not disclosed. Citadel declined to comment through a spokesperson. TechCrunch first reported the retained private holdings following the deal.
Situational Awareness did not sell its private investments. Its most significant retained position is a stake in Anthropic valued at approximately $5 billion, based on the AI company’s most recent private valuation of $965 billion in May. Anthropic has been cited as a candidate for an initial public offering as early as October, which would create a valuation mechanism for the stake that the current private market cannot provide. The Anthropic position remains the fund’s most liquid large asset that has not yet been converted to cash.
Two other private holdings were retained: MatX, an AI chip startup, and Fluidstack, an AI data center company that was in discussions for a funding round valuing it at $18 billion in April. Both are illiquid. Their market-relevant value, if any, cannot be confirmed through independent public reporting at this time.
The backers who committed to Situational Awareness when it launched include Jane Street, the quantitative trading firm; Patrick and John Collison, the co-founders of Stripe; and Daniel Gross and Nat Friedman, both executives at Meta. Their commitments were made on the strength of Aschenbrenner’s thesis and his research record at OpenAI, not on the basis of prior fund management experience. It is not known whether any backers have requested redemptions following July’s losses.
Among the market readings that circulated this week, several traders read the Situational Awareness implosion as a signal that the AI trade may have reached a short-term floor. The logic runs that a fund built entirely on concentrated AI exposure has now been forced to liquidate, removing significant selling pressure from the sector. AMD’s $5 billion strategic investment in Anthropic, announced days before the Citadel deal, showed that long-term capital has not left the sector. Whether July’s forced selling represents temporary dislocation or a structural reassessment of AI equity valuations is the question Situational Awareness’s next chapter will help answer.
What has not been reported is the leverage ratio the fund was running when losses accelerated, the specific mechanics of the Citadel transaction including price and any secondary terms, or whether Aschenbrenner intends to continue managing the fund as a private equity vehicle focused on its retained positions. The fund’s thesis was never purely about public markets. It began with a document also titled Situational Awareness, which laid out a case for AI’s transformative impact across decades. That argument has not been tested by the events of July. What was tested, and found insufficient, was a leveraged public equity implementation of it.
