Leopold Aschenbrenner’s AI fund plunges 67% in July amid stock rout

Leopold Aschenbrenner’s Situational Awareness lost 67% in July after steep losses tied to AI stocks, then sold most of its public equity holdings to Citadel as the selloff hit its portfolio.

The scale of the damage made the fund a test case for how fragile AI investing can become when sentiment turns. A vehicle built around a concentrated technology thesis was exposed to the same names that had helped drive the boom, and the reversal came fast enough to force a major unwind of public stock positions.

The firm told investors, “We let you down this month,” after the losses. That admission came as the fund’s holdings were being pared back and as Aschenbrenner was pushed to exit public stocks altogether, a sharp reset for one of the most closely watched AI trades in the market.

The drawdown landed against a broader market retreat that had already taken a toll on AI-linked and software shares. A separate July 31 update said the selloff in global software and services had erased nearly $1 trillion in market value, while hedge funds had still been on track for another stellar year on the AI boom just days earlier. The contrast underscored how quickly crowded enthusiasm can flip into forced de-risking when valuations stop matching earnings reality.

Situational Awareness had also become a symbol of how quickly AI conviction could attract capital. Public profiles described the fund as having grown to more than $20 billion in assets under management. Fintel’s latest SEC filing data listed 42 disclosed holdings and a most recent portfolio value of about $13.68 billion, showing how large and equity-heavy the book had become before the unwind.

The July rout now raises a sharper question than a single bad month: whether the AI trade has been priced as a durable structural shift or as a momentum story vulnerable to violent reversals. Citadel’s purchase of most of the stock book shows there was still a market for the positions, but the need to sell them at all points to the same risk that hangs over the broader sector, concentration can magnify losses just as quickly as it magnifies gains.