From 2,000% Gains to Liquidation: ‘AI Stock God’ Fund Falters on Wall Street
A leveraged bet on the future of AI computing ended badly on Wall Street on July 30. Situational Awareness, the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, was forced to liquidate all of its public-market stock positions after an AI-sector selloff and an epic short squeeze. The buyer was Citadel, the investment firm founded by legendary Wall Street hedge-fund manager Ken Griffin. Multiple local media outlets reported that Citadel acquired all of the disclosed holdings in a single transaction. Neither firm disclosed the purchase price. Aschenbrenner was born in Berlin, Germany, in 2001. He graduated from Columbia University at age 19 as the top student in his class and later joined OpenAI. He was dismissed in 2023 after submitting a memo about security vulnerabilities at the company. Drawing on insights from OpenAI’s core research team, Aschenbrenner founded the hedge fund Situational Awareness LP in September 2024. Its investors include Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman and institutions including Jane Street. The firm’s website describes it as a global equity investor focused on artificial intelligence and says AI “will be the primary driver of global market returns over the next decade.” The fund generated a return as high as 439% in the first half of 2026. Its assets under management had grown to $45 billion by early July, and its cumulative return since inception had exceeded 2,000%. Global chip stocks suffered a deep pullback in July, dealing Aschenbrenner a severe setback. The fund’s major holdings, including SanDisk, CoreWeave and Bloom Energy, all plunged during the month. The losses were compounded by the fund’s extremely high leverage. According to people familiar with the matter, its leverage ratio at one point approached four times, while it also held large short positions in software stocks. A recent recovery in software-stock valuations therefore hurt the fund on both sides of the trade. In a July 24 letter to investors, Aschenbrenner described the market volatility as a “strategic window for intervention.” In a postscript, he invited investors to add capital on Aug. 1. In the early hours of July 30 Beijing time, the Federal Reserve voted 9-3 to leave interest rates unchanged, keeping the federal-funds target range at 3.50% to 3.75%. Cleveland Fed President Hammack, Minneapolis Fed President Kashkari and Dallas Fed President Logan dissented, each calling for a 25-basis-point rate increase. Although the Fed did not raise rates, markets interpreted the decision as a possible precursor to a resumption of rate hikes. U.S. stocks then collapsed in late trading, with chip stocks hit especially hard. The sharp decline triggered margin calls from banks. According to people familiar with the matter, prime brokers including Bank of America, Goldman Sachs and JPMorgan urgently required Aschenbrenner to provide additional collateral. Unable to meet the calls, and with his wedding scheduled for the coming weekend, the fund was forced to package and sell all of its public-stock holdings. Citadel ultimately bought nearly all of the fund’s public stocks at what was described as a “super discount.” In an ironic turn, U.S. chip stocks rebounded strongly the following night. SanDisk rose 25.99%, CoreWeave gained 21.51% and Bloom Energy advanced 26.49%.
Situational Awareness, the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, was forced to liquidate all of its public-market stock positions after an AI-sector selloff and an epic short squeeze. The buyer was Citadel, the investment firm founded by legendary Wall Street hedge-fund manager Ken Griffin. Multiple local media outlets reported that Citadel acquired all of the disclosed holdings in a single transaction. Neither firm disclosed the purchase price.
Aschenbrenner was born in Berlin, Germany, in 2001. He graduated from Columbia University at age 19 as the top student in his class and later joined OpenAI. He was dismissed in 2023 after submitting a memo about security vulnerabilities at the company.
Drawing on insights from OpenAI’s core research team, Aschenbrenner founded the hedge fund Situational Awareness LP in September 2024. Its investors include Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman and institutions including Jane Street.
The firm’s website describes it as a global equity investor focused on artificial intelligence and says AI “will be the primary driver of global market returns over the next decade.”
The fund generated a return as high as 439% in the first half of 2026. Its assets under management had grown to $45 billion by early July, and its cumulative return since inception had exceeded 2,000%.
Global chip stocks suffered a deep pullback in July, dealing Aschenbrenner a severe setback. The fund’s major holdings, including SanDisk, CoreWeave and Bloom Energy, all plunged during the month. The losses were compounded by the fund’s extremely high leverage. According to people familiar with the matter, its leverage ratio at one point approached four times, while it also held large short positions in software stocks. A recent recovery in software-stock valuations therefore hurt the fund on both sides of the trade.
In a July 24 letter to investors, Aschenbrenner described the market volatility as a “strategic window for intervention.” In a postscript, he invited investors to add capital on Aug. 1.
In the early hours of July 30 Beijing time, the Federal Reserve voted 9-3 to leave interest rates unchanged, keeping the federal-funds target range at 3.50% to 3.75%. Cleveland Fed President Hammack, Minneapolis Fed President Kashkari and Dallas Fed President Logan dissented, each calling for a 25-basis-point rate increase. Although the Fed did not raise rates, markets interpreted the decision as a possible precursor to a resumption of rate hikes. U.S. stocks then collapsed in late trading, with chip stocks hit especially hard.
The sharp decline triggered margin calls from banks. According to people familiar with the matter, prime brokers including Bank of America, Goldman Sachs and JPMorgan urgently required Aschenbrenner to provide additional collateral. Unable to meet the calls, and with his wedding scheduled for the coming weekend, the fund was forced to package and sell all of its public-stock holdings. Citadel ultimately bought nearly all of the fund’s public stocks at what was described as a “super discount.”
In an ironic turn, U.S. chip stocks rebounded strongly the following night. SanDisk rose 25.99%, CoreWeave gained 21.51% and Bloom Energy advanced 26.49%.