From manifesto to money
In 2024, Leopold Aschenbrenner was a young ex-OpenAI researcher who published a 165-page essay about the future of artificial intelligence. The paper made him famous in Silicon Valley circles. Within months, he turned that fame into a hedge fund called Situational Awareness, built around a single thesis: AI would drive enormous demand for chips, memory, data centres, and power infrastructure, and the stocks tied to those industries would keep climbing.
The early returns were spectacular. The fund gained roughly 439 per cent after fees through the end of June 2026 and grew to as much as $45 billion. His backers included the Stripe co-founders, former GitHub CEO Nat Friedman, and investor Daniel Gross. At 25, Aschenbrenner was one of the most watched names in AI investing.
July changed everything
Then the AI stock selloff hit. The fund had concentrated bets in semiconductor and AI infrastructure names, including SK Hynix, CoreWeave, Nebius Group, and Micron. All of them dropped more than 35 per cent in July. At the same time, short positions in software companies like Adobe moved against the fund as those stocks rallied.
The real killer was leverage. Reports suggest the fund used leverage of up to 400 per cent. In a rising market, that multiplies your gains. In a falling market, it multiplies your losses and triggers margin calls from the banks lending you the money. That is exactly what happened. Bank of America, Goldman Sachs, and JPMorgan Chase all issued margin calls.
By the time the dust settled, the fund had collapsed from $45 billion to roughly $10 billion. Aschenbrenner was forced to sell the entire public stock portfolio in a single block trade to Ken Griffin's Citadel at below-market prices.
The lesson nobody wants to hear
Aschenbrenner was not wrong about AI being important. He was wrong about how much risk you can pile onto a single conviction. A 400 per cent leverage ratio means even a moderate drop wipes you out before you can adjust. You do not need to be wrong about the future. You just need to be early, or unleveraged, or both.
My Opinion
This story is wild to me. Not because some fund blew up. Funds blow up all the time. What gets me is how quickly people handed billions to a 24-year-old because he wrote a good essay. No track record managing money. No experience with drawdowns. Just vibes and a thesis about chips. And look, I have nothing against young people doing big things. But there is a difference between understanding technology and understanding risk. The AI bet might even be right long-term. But when you lever up 400 per cent and one bad month wipes out years of gains, it does not matter if you are right eventually. You are broke now.
Ronny M (ronny76netstuff@gmail.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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