What happened
Situational Awareness, formed by ex-OpenAI researcher Leopold Aschenbrenner, has been buying call options on AMD, Bloom Energy, CoreWeave, SK Hynix and SanDisk, with hundreds of millions of dollars in option premiums.
Why it matters
The fund generated a 439% net return from the start of the year through June 30 but fell about 67 percent in July, when it was operating at around four times leverage and had to sell AI assets, with Citadel buying much of the public-equity holdings.
What to watch
The test is whether AI stocks turn volatile again and those leveraged option positions are forced to show themselves. Watch the fund's roughly four times leverage as the key risk.
WHO IT HITSInvestors watching aggressive AI hedge funds get a clue about where one of them sees the next opportunity across processors, cloud computing, memory and electricity, and a reminder that the same leverage cuts both ways.
Ask the AI about this article →
Summaries like this, in your inbox every morning.
Situational Awareness was formed by Leopold Aschenbrenner, an ex-OpenAI researcher, and it leaned heavily into the AI trade. That worked spectacularly for a while. From the beginning of the year through June 30 the fund generated a 439% net return, according to an investor letter seen by the Financial Times, briefly making it one of the best-performing large funds of 2026.
The same leverage that powered those gains made the fund fragile. It was said to be operating at around four times leverage, so when AI stocks turned in July its portfolio declined by about 67 percent and it was forced to sell off its AI assets. Citadel swooped in a day later to buy much of the public-equity holdings.
The new option positions on AMD, Bloom Energy, CoreWeave, SK Hynix and SanDisk put the fund back on the same broad AI infrastructure issue. The picks span processors, cloud computing, memory and electricity, which the article describes as some of the main bottlenecks in the AI buildout. Whether that read proves right looks likely to hinge on whether AI stocks become volatile again and those leveraged option positions are forced to show themselves.
For example, today's edition would include:
AI-summarized, only the topics you pick — one digest a day via Email, Slack, or Discord.
Free · 30 seconds with Google · unsubscribe anytimeWhat is AIToday? →
Ask AI anything about this article. Q&As are published on this page for other readers too.
Keri Tracy, VP and chief audit executive at Newell Brands, told theCUBE that audit has a seat at the table for…
AIUC raised a $40 million Series A led by Ribbit Capital to start auditing frontier AI models, after previousl…
Factory announced it raised $200 million, backed by Blackstone, Khosla Ventures, Sequoia Capital, NEA and othe…
Google launched Gemini 3.8 Live and Gemini 3.8 Live Extended Thinking, its most advanced voice models yet, wit…
Salesforce launched Koa, a reasoning model built on Nvidia's Nemotron open-weights platform, and Claudeforce…
Profound raised $180 million in a Series D led jointly by Sequoia Capital and Kleiner Perkins, at a $1.8 billi…
