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Suddenly, things ain’t looking great for the AI industry. Or at least for the people pouring loads of money into it.
Situational Awareness, a much-hyped AI hedge-fund whose 24-year-old founder Leopold Aschenbrenner preached endless AI gains, basically imploded over this month amid a mass tech sell-off.
The Wall Street Journal reported that it’s now down 67 percent in July, forcing Aschenbrenner to desperately seek clients to buy its shares on the cheap to cover its losses.
“We let you down this month,” the fund wrote in a letter to clients, per the WSJ.
Aschenbrenner, a former OpenAI researcher who had zero investment experience before launching the fund, has been hailed as the “Nostradamus of AI.” He apparently didn’t predict his rapid reversal of fortunes, though.
The Financial Times reported that his fund returned 439 percent for the year through June, and was up 1,551 percent since its founding.
Then came July. According to CNBC, the fund assets reached a peak of $45 billion, before beginning a precipitous decline this month. Pretty much everything went against its way. Its commitments to AI infrastructure tanked when the likes of the semiconductor manufacturer SK Hynix dropped off a cliff. And it shorted software companies — which investors once feared would be outmoded by AI labs — like Adobe, which instead continued to steadily climb.
Other companies it invested in, including Sandisk, Micron, and CoreWave, are all down more than 35 percent this month, CNBC noted.
As the dominoes fell, Aschenbrenner sent a letter to investors to quell their fears, highlighting how well it had performed until this point. Boldly, he also said that the mass tech sell off was a “particularly good time to add funds,” the FT reported.
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