A 165-page article made him a prophet of the AI era; a single fund gave him control over hundreds of billions of dollars. But as the market shifted from frenzy to calm and bets on AI infrastructure began to backfire, this 24-year-old investment star was forced to confront skepticism from Wall Street.
Twenty-four-year-old Leopold Aschenbrenner, once dubbed the "AI Warren Buffett" by investors for his predictions on AI trends, now faces a liquidity crisis at his hedge fund, Situational Awareness, due to losses in AI stocks and trading errors.
According to the Financial Times, Situational Awareness recently made significant adjustments to its portfolio. Multiple informed sources said the fund suffered substantial losses due to declines in AI infrastructure-related stocks and failed short trades on software companies, and is currently selling assets to meet margin calls.
Situational Awareness reached approximately $45 billion in size in early July, but subsequent market declines placed rapid pressure on the fund.
The fund's primary investment thesis is based on Ashenbrenner's long-term outlook on the AI industry. He believes that more powerful AI systems will significantly drive demand for chips, memory, data centers, and energy infrastructure.
However, this bet has been hit by recent market reversals. According to insiders, the fund’s holdings in AI infrastructure assets, such as SK Hynix, have recently underperformed; at the same time, the fund’s short positions in software companies like Adobe (ADBE) have incurred losses due to rising stock prices.
Wall Street institutions enter the market, with Citadel taking over public assets.
As losses mounted, Situational Awareness's primary brokers began assisting the fund in raising cash to meet margin requirements.
According to insiders, several major broker-dealers, including Bank of America, Goldman Sachs, and JPMorgan Chase, are collaborating with the fund to help it reduce its positions or sell assets in an orderly manner.
These institutions had previously begun disclosing portions of the fund’s long and short positions to help alleviate its funding pressures.
Ultimately, the hedge fund founded by Castle Investment’s Ken Griffin reached an agreement to acquire the publicly traded assets of Situational Awareness.
This transaction outperformed competitors such as Millennium Management and Jane Street. After the transaction, Situational Awareness retained only a small amount of publicly traded equity assets without leverage, along with private investments. However, it remains unclear whether the fund has fully met its margin requirements.
The Rise and Risks of AI Investment Stars
Achenbrenner previously rose to prominence in the tech investment field by accurately predicting the future of AI.
In 2024, he published a 165-page article titled "Situational Awareness," arguing that the rapid advancement of artificial intelligence would drive a surge in global demand for computing power, necessitating large-scale expansion of advanced chips, storage, data centers, and energy infrastructure. This article became the foundational idea behind the fund he founded.
Ashenbrenner graduated from Columbia University at age 19 and delivered the commencement address as valedictorian. He then joined OpenAI’s Superalignment team. In 2024, he left OpenAI, which stated that his departure was related to the improper disclosure of internal information.
Schwenninger objected, stating that he shared only basic, non-confidential planning documents and believed his departure was related to his prior warnings about OpenAI’s safety practices. OpenAI stated that these safety issues were unrelated to his departure.
After leaving OpenAI, Aschenbrenner leveraged his influence to found Situational Awareness, gaining support from investors including Nat Friedman, former CEO of GitHub, and Stripe founders Patrick Collison and John Collison.
The fund then rapidly expanded its scale and concentrated its bets on companies in the AI industry chain. According to regulatory filings, as of the end of the first quarter, the fund’s major holdings included Nebius Group, SanDisk (SNDK.O), Micron Technology (MU.O), and CoreWeave. All four of these companies’ stocks fell more than 35% at one point this month.
The fund crisis reveals the risks of young investors' investment patterns.
Before the fund encountered a crisis, Ashenbrenner emphasized the fund's performance to investors.
He stated that, as of the end of June, the fund's year-to-date return reached 439%, and its total return since inception reached 1,551%. However, he subsequently began reaching out to investors to seek additional capital support or to sell off portions of its assets.
A source said that Ashenbrenner attempted to reduce losses by selling assets, but "gained the illusion that he was still in control."
Meanwhile, the fund also discussed selling its shares in Anthropic, but it is unclear whether the transaction was completed. A fund spokesperson stated that reports suggesting the fund is selling its Anthropic shares are inaccurate.
This crisis also became a major test of Aschenbrenner’s investment philosophy.
A person involved in the negotiations said that what the public should truly focus on is not the transaction structure or how much profit Citadel could gain from the deal, but why the market would channel such massive funding—and further provide financing—to a young investor with no personal trading experience and no infrastructure.