Situational Awareness fund's 56% chip bet collapses in AI selloff

Leopold Aschenbrenner's Situational Awareness fund held 56 percent of its $20.2 billion portfolio in Sandisk and Micron before the July AI selloff erased both positions and forced a rescue by Citadel.

The fund's 13F filing, disclosed Aug. 15, shows Sandisk at $5.67 billion and Micron at $5.57 billion as of June 30, with Bloom Energy, TSMC and Nebius completing the top five. Reuters reported July 30 that Citadel negotiated a bailout after the positions collapsed.

Sandisk fell 43 percent and Micron 24 percent in the four weeks to July 30, while Bloom Energy dropped 31 percent, TSMC 15 percent and Nebius 31 percent. The fund had closed out more than $8 billion of put protection on Nvidia, Oracle, Broadcom and AMD before the end of June, leaving it fully exposed to the downturn.

The collapse shows how concentrated, leveraged AI bets can transmit losses across the market. Proprietary trading firm Jane Street lost about $15 billion in July because of its stake in Situational Awareness, the Wall Street Journal reported Aug. 14.

From $225 Million to $20.2 Billion in 18 Months

Aschenbrenner, a 25-year-old former FTX Future Fund analyst, built Situational Awareness into one of the most-watched AI investment vehicles. The fund's disclosed holdings grew from $225 million in the fourth quarter of 2024 to $5.5 billion a year later, then to $13.7 billion in the first quarter and $20.2 billion by June 30, according to its 13F filings. The fund returned more than 1,000 percent since its 2024 inception, a thesis laid out in Aschenbrenner's "Situational Awareness: The Decade Ahead" whitepaper.

The portfolio, though spread across 26 holdings, was in effect one bet on AI infrastructure. Beyond the two memory-chip giants, the fund held about $1.9 billion in Bloom Energy, betting on data-center power demand; $1.27 billion in TSMC for advanced manufacturing; and $1.23 billion in Nebius, alongside stakes in CoreWeave, Core Scientific, Applied Digital and IREN covering cloud computing and data centers. When reclassified by industry chain, most positions reflected a single conviction that AI computing demand would keep rising.

The Safety Rope Was Cut

The most damaging move came in the second quarter. In the first quarter, the fund held put options on chip and storage leaders — including the SMH semiconductor ETF, Nvidia, Oracle, Broadcom, AMD, TSMC and ASML — with a notional value exceeding $8 billion, more than 60 percent of total exposure. Those hedges were fully liquidated by June 30, replaced with direct equity stakes in Micron and Sandisk.

The shift left the fund with no downside protection when the AI trade unwound in July. Micron fell 36 percent and Sandisk 55 percent from June 30 to July 29, according to the fund's disclosures. Under leverage, those declines consumed the fund's entire safety cushion within weeks.

The Citadel deal, negotiated by Ken Griffin's firm, saw Aschenbrenner unwind most of his public equity positions while retaining private assets, including a stake in AI lab Anthropic estimated at about $5 billion. For the broader market, the episode raises questions about concentration risk among high-profile AI investors. When a single fund holds more than half its assets in two closely related semiconductor names, a sector-wide pullback can force rapid deleveraging that spills into other positions — the mechanism that turned Situational Awareness's July losses into a systemic event. The Jane Street loss, disclosed Aug. 14, shows the damage extended well beyond the fund's own investors.

This article is for informational purposes only and does not constitute investment advice.