Leopold Aschenbrenner's Situational Awareness fund hemorrhaged $35 billion in July 2026. The collapse happened fast. A sector-wide AI selloff wiped $3 trillion from the market, and the fund's heavily concentrated long positions in semiconductor stocks like SK Hynix, Nebius, and Micron got crushed while short bets on software companies offered almost no protection.

The fund went from $45 billion in assets under management to roughly $10 billion. That's a 67% drawdown in a single month. To stay afloat, Aschenbrenner had to sell around $16 billion in public equities to Citadel at a 10% discount to market prices, a fire sale that completed by July 30.

How a thesis became a trap

Situational Awareness built its reputation on a straightforward bet: artificial intelligence is the defining technology of the era, so go all in. The fund's name came from Aschenbrenner's 2024 essay series on artificial general intelligence that grabbed attention across tech circles and pulled in serious capital. Growth was staggering. Portfolio holdings climbed from $254 million in late 2024 to over $5.5 billion by the end of 2025. Then, in the first half of 2026, the bull market pushed it to $45 billion.

But concentration killed the thesis. When AI rotated, the imbalance between long semiconductor plays and undersized shorts meant losses compounded fast. Risk managers call this scenario a blowup, and Situational Awareness hit every mark.

The private holdings salvage

Here's where the math gets strange. Despite the July disaster, the fund reported roughly 80% year-to-date gains through the end of the month. That's only possible because of unrealized gains in private holdings, most significantly a stake in Anthropic, the AI safety firm behind Claude. Those positions weren't marked down when the public markets tanked, which kept the fund's overall return in positive territory even as liquid assets evaporated.

Aschenbrenner isn't unfamiliar with high-stakes narratives. He previously worked at FTX's Future Fund, the philanthropic arm of Sam Bankman-Fried's now-defunct crypto empire. That history adds another layer to the Situational Awareness story, a reminder that strong conviction and access to capital don't always protect against regime shifts in the market.

This material is for informational purposes only and should not be construed as financial advice or a recommendation to buy or sell any asset.