Situational Awareness, the investment firm tied to AI researcher Leopold Aschenbrenner, posted a steep drawdown in July as AI-related stocks sold off sharply. The fund’s net asset value fell 67% for the month, according to the report. Aschenbrenner said July performance came in far below expectations and told investors, “We let you down.”
The fund had attracted attention for its long-term bet on AI growth, with positions focused on AI infrastructure, AI chips, and related technology companies. Aschenbrenner himself had already drawn notice through his report, “Situational Awareness: The Decade Ahead,” which examined AI capability gains over the next decade, industry competition, and AI safety.
The July slump put the risks of thematic AI investing back in focus. The report said that even when investors keep a constructive long-term view on technological change, concentrated exposure to a small group of high-growth technology assets can still produce severe short-term swings. It also noted that parts of the AI trade had seen valuations rise quickly beforehand, leaving those assets vulnerable as interest rates, earnings expectations, and fund flows shifted.
Situational Awareness, the investment firm associated with AI researcher Leopold Aschenbrenner, suffered a sharp setback in July as AI-related stocks fell heavily. The fund’s net asset value dropped 67% over the month.
Aschenbrenner acknowledged that July performance was far below expectations. In a letter to investors, he wrote, “We let you down.”
A fund that drew attention for its AI thesis
Aschenbrenner had already attracted attention through his report, Situational Awareness: The Decade Ahead, which discussed AI capability gains over the next 10 years, industry competition, and AI safety.
The Situational Awareness fund had also been watched for its long-term bet on AI industry growth. Its strategy focused on AI infrastructure, AI chips, and related technology companies.
July sell-off hit high-valuation tech names
In July, the AI sector went through a broad pullback, with high-valuation technology stocks coming under selling pressure and weighing on the fund’s results. The drawdown highlighted a core risk in AI-themed investing: even with a long-term bullish view on technological change, concentrated bets on a small number of high-growth tech assets can still lead to violent short-term swings.
The report added that while the market still sees long-term growth potential in artificial intelligence, some AI-linked assets had previously climbed to elevated valuations. Those names then saw a marked correction as interest rates, earnings expectations, and capital flows shifted.
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