AI Prophet Leopold Aschenbrenner’s Hedge Fund Faces Steep Losses Amidst Tumbling Semiconductor Stocks

Two years ago, Leopold Aschenbrenner positioned himself as one of the world’s few individuals with a clear vision of the future. In a comprehensive, 165-page essay that became a cornerstone of reading in Silicon Valley, the former OpenAI researcher presented himself as a prophet for the impending era of artificial superintelligence. However, this week, the limitations of Aschenbrenner’s foresight became starkly apparent. The AI-focused hedge fund he manages, named Situational Awareness—the same title as his widely circulated June 2024 manifesto—encountered the unforgiving reality of plummeting semiconductor stocks and margin calls from Wall Street.

At its zenith earlier this month, Aschenbrenner’s fund commanded an impressive $45 billion in assets. By Thursday, however, after being compelled to liquidate all of its leveraged stock holdings, including heavily impacted companies like SK Hynix and CoreWeave, to Ken Griffin’s Citadel at a reduced price, the fund’s assets had dwindled to approximately $10 billion, according to individuals familiar with the situation. The dramatic trajectory of Aschenbrenner’s meteoric rise and subsequent abrupt fall has captivated both financial markets and the technology sector, marking him as the most prominent casualty to date of the inherent volatility accompanying the artificial intelligence boom.

A figure who elicits strong opinions, Aschenbrenner was viewed by his online followers—a Columbia University valedictorian at the age of 19—as a visionary of the next significant technological wave. They closely followed his fund’s quarterly filings for insights into promising AI stocks. Prior to the recent downturn, Situational Awareness had achieved gains exceeding 1,000% since its inception, as reported by The Wall Street Journal last month. The Journal also noted that Aschenbrenner was merely 24 years old at the time of that report.

Conversely, critics highlighted Aschenbrenner’s lack of prior experience in fund management before launching his venture in July 2024, suggesting his success was more attributable to luck than expertise. Some pointed to his early work experience at the now-defunct cryptocurrency firm FTX, where he assisted founder Sam Bankman-Fried in managing a charity from a penthouse in the Bahamas. Other figures on Wall Street, including former traders from major investment banks, observed that given reports of Situational Awareness employing leverage up to 400%, the fund’s collapse was not unexpected.

"Many individuals viewed this collapse as a matter of ‘when,’ not ‘if,’" stated Jerry Diao, who operates a Wall Street coaching firm. "His long-term perspectives on AI might be accurate, but in the public markets, one must be prepared for short-term fluctuations." The hedge fund did not immediately respond to a request for comment from CNBC.

Earlier in the week, preceding the sale to Citadel, approximately two-thirds of Situational Awareness’s portfolio consisted of long and short positions in public equities, according to one source. The remaining portion comprised investments in private companies, notably a multibillion-dollar stake in Anthropic, the source added. CNBC’s sources requested anonymity to discuss nonpublic details. The near-failure of Situational Awareness coincides with the hedge fund manager’s wedding, scheduled for this weekend, sources informed CNBC’s David Faber. Aschenbrenner is engaged to Avital Balwit, chief of staff to Anthropic CEO Dario Amodei, according to a profile in Fortune.

"Weirdness" and "Disagreeableness" Characterize Early Years

Born in Germany to physician parents before relocating to the United States, Aschenbrenner demonstrated an early aptitude for mathematics and computer science, according to various profiles and podcast interviews. He advanced through the German school system rapidly, completing high school at 15. During his tenure at Columbia University as a teenager, he gained recognition for an academic paper titled "Existential Risk and Growth."

A classmate at Columbia, Sofia Montrone, recalled not knowing of Aschenbrenner until they met virtually shortly before their 2021 graduation. "It wasn’t as if he was some prominent figure emerging from the school; he was just another student," Montrone told CNBC, describing her classmate as "child-like" and socially awkward during their interaction. Montrone herself was the salutatorian of their graduating class.

Aschenbrenner has since attributed his personality—what he termed his intellectual "weirdness" and "disagreeableness"—as being stifled in German culture, eventually viewing these traits as the source of his competitive edge. While at Columbia, he co-founded the university’s chapter of Effective Altruism, a philosophy embraced by some in the tech industry, which advocates for founders to maximize their financial success to benefit humanity. This network became his professional pathway, leading him to work with another proponent of effective altruism, Sam Bankman-Fried, after his graduation in 2021. He briefly worked for the Future Fund, FTX’s philanthropic arm, prior to the cryptocurrency firm’s collapse.

In 2023, Aschenbrenner joined OpenAI’s Superalignment team, collaborating with Ilya Sutskever on the critical challenge of ensuring AI’s alignment with human values. Following a security breach of OpenAI’s internal systems by a hacker, he sent a memo to the company’s board, warning of insufficient security measures that could be exploited by foreign espionage, specifically naming China. In 2024, OpenAI terminated Aschenbrenner’s employment, citing accusations of improperly sharing confidential information—a claim he has contested, asserting that he was raising concerns about the company’s security practices.

"I had a positive impression of Leopold during his time at OpenAI," Scott Aaronson, a computer scientist at the University of Texas at Austin who previously worked on AI safety at OpenAI, told CNBC via email. "I was disappointed when he was let go for sharing information in a manner that leadership did not approve of. It appeared he was attempting to do the right thing, and they overreacted." An OpenAI spokesperson declined to comment, referring to previous company statements indicating disagreement with many of Aschenbrenner’s assertions. Representatives for Columbia University and its Effective Altruism chapter did not respond to requests for comment.

Stripe and GitHub Investors Backed Early Venture

Mere weeks after his departure from OpenAI, Aschenbrenner articulated a sweeping vision of the future trajectory of artificial intelligence and the world at large, drawing upon his brief tenure at the leading AI firm. His June 2024 essay posited that artificial general intelligence could emerge within years and that governments were significantly underestimating the pace of advancement. Admirers interpreted this as evidence of Aschenbrenner’s prodigious talent and valuable insights into AI’s development, while critics argued that it exaggerated both the technology’s near-term capabilities and his own certainty about the future.

By July of the same year, Aschenbrenner leveraged his growing prominence to secure seed capital for his hedge fund, reportedly raising $225 million from Stripe co-founders Patrick and John Collison, former GitHub CEO Nat Friedman, and investor Daniel Gross. This marked the beginning of a two-year period of extraordinary performance on Wall Street. "The world will awaken before long," Aschenbrenner wrote at the time, adding that only a few hundred individuals within the AI community grasped the impending changes. "If they are seeing the future even remotely accurately," he continued, "we are in for a wild ride."