Aschenbrenner’s AI Hedge Fund Plunges 67% in July Market Rout

The fund, which garnered a cult-like following for its aggressive bets on the AI sector since launching in 2024, fell victim to the same volatility currently rattling global chip markets. Aschenbrenner described the collapse of his positions as a feedback loop similar to a bank run, where rapid price movements and evaporating liquidity forced the firm to remove all leverage from its portfolio. Despite the monthly losses, the fund remains up 80% for 2026 due to previously outsized gains.

In his letter to investors, Aschenbrenner acknowledged the failure to manage risk as market conditions turned hostile. While he remains optimistic about the long-term fundamentals of his holdings, the firm’s decision to liquidate the bulk of its stock portfolio to Ken Griffin’s Citadel marks a significant retreat. The incident highlights the fragility of highly leveraged bets on the AI boom, as investors grow increasingly skeptical of valuations that many now view as unsustainable.