AI Infrastructure Selloff Forces Aschenbrenner's Fund to Hand Public Bets to Citadel

Global markets have made one bet more heavily than any other, that spending on artificial-intelligence (AI) hardware will keep rising. This week that bet produced its clearest loss. Situational Awareness, the fund run by former OpenAI researcher Leopold Aschenbrenner, was forced to sell most of its public stock positions to Kenneth Griffin's Citadel after steep losses, according to the Israeli financial daily Globes and confirmed by Bloomberg reporting. The fund, which had grown to roughly 45 billion dollars at the start of July, saw its assets fall to about 10 billion.

The losses came from both directions. The fund's long positions in AI infrastructure companies, including memory-chip makers, power suppliers and cloud-computing providers, fell sharply, while its short positions in software companies moved against it. CNBC reported that several of its largest holdings had dropped more than 30 percent over the month. Aschenbrenner keeps a roughly 5 billion dollar stake in Anthropic and told clients the decline was a buying opportunity, inviting fresh capital from August 1.

The paradox is that the underlying businesses are reporting strong numbers. SK Hynix and Samsung Electronics, whose combined revenue makes up about 80 percent of the memory-chip market, reported figures that countered doubts about AI demand, generating a combined operating profit near 104 billion dollars in a single quarter. Yet SK Hynix shares fell close to 10 percent in Seoul after its results missed the most optimistic forecasts, a sign that expectations, not earnings, now set prices.

That gap between real output and financial valuation is visible inside China too, where the AI build-out is deepening a divided economy, with memory-chip hubs operating at full capacity while older industrial regions struggle. Investors are asking whether the pace of capital spending on AI is sustainable, and this week the leveraged funds positioned for continued gains found that the answer is not guaranteed.