One of the most visible bellwethers of this summer’s shift in sentiment toward AI stocks is Situational Awareness, the AI-focused hedge fund founded by ex-OpenAI researcher Leopold Aschenbrenner.

Aschenbrenner founded the lean investment firm after leaving OpenAI in 2024. The fund rose from managing just a few hundred million in capital to $45 billion in assets at its peak. This placed its investors - including Stripe's Patrick and John Collison, Nat Friedman, Daniel Gross and the trading firm Jane Street - up a reported 439% this year alone (after fees).

After July’s Nasdaq rout, however, these gains have been slashed. The fund lost an estimated 67% in July, decimating the impressive gains accrued during H1 2026.

This came as the Nasdaq 100 slid into a technical correction after nearly two years of upward momentum, buoyed by the AI boom. The index now sits 11.3% below its June high, with investors left wondering when the hundreds of billions of dollars put into AI infrastructure this year will be reflected in share prices.

The move was precipitated by a deepening selloff among semiconductor stocks, to which Aschenbrenner’s firm was heavily exposed.

The Financial Times reported this week that Situational Awareness has now been forced to approach existing investors for fresh capital. These investors were additionally offered the chance to buy assets directly out of the company’s portfolio, through informal deals.

Aschenbrenner’s July 24 investor letter

Aschenbrenner’s arguably understated response to the crisis was to state that the fund “has not been immune” to the market turbulence. In a July 24 investor letter detailing its half-year results, he acknowledged that its heavy exposure to AI infrastructure stocks, particularly across Asian markets, had amplified the downturn. The fund has therefore been forced to unload assets to generate fresh capital.

Maintaining the optimistic framing, Aschenbrenner added that the decline represents the most attractive buying opportunity since early 2025. He cited several upcoming catalysts in H2 2026, including the highly anticipated Anthropic IPO, as potential pivot points for the market. Anthropic submitted confidential IPO paperwork to the SEC on June 1 and has not yet set a date. At present, Situational Awareness holds a significant private stake in the frontier AI lab.

Aschenbrenner closed his letter by offering investors the ability to add cash to their accounts with the firm from August 1 onward.

July’s biggest AI stock losers

The stocks that wreaked the most havoc on Situational Awareness’ balance sheet included some of the biggest names in AI infrastructure. The firm’s most significant holdings included tech giants AMD and Oracle. Each of these fell around 20% during the sell-off.

AI cloud provider Nebius - listed on the Nasdaq and headquartered in the Netherlands - was hit even harder. The company fell 48% from its June high, equating to over $35 billion in market value wiped within a month. Memory manufacturer Sandisk and cloud provider CoreWeave each fell over 50%.

The fund’s Asian exposure was an additional aggravating factor. Situational Awareness was among the cornerstone investors in the Nasdaq listing of South Korean semiconductor company SK Hynix on July 10, which shared a $5 billion anchor allocation. The company’s shares dipped about 15% below the issue price at the end of July.

Situational Awareness’ future remains uncertain

Some key questions still hang over Situational Awareness’ decline, making it difficult for outside observers to assess the full extent of the damage. The FT reported that the fund counts several major Wall Street banks among its creditors, but the sizes of these positions remain private. The same is true of the fund’s total trading losses. Situational Awareness did not respond to requests for comment.

Aschenbrenner has framed the firm’s hardships as an opportunity for fund participants to reallocate in preparation for further upside. The question is whether watching triple-digit gains slashed so aggressively within a single month will undermine their confidence in the long run.