**Situational Awareness, the AI-focused hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, faced steep losses in July 2026 amid a broader rout in AI infrastructure and semiconductor stocks.** The fund, which had grown rapidly to a reported peak of around $45 billion in assets under management through concentrated, often leveraged bets on names like Anthropic, CoreWeave, and chip-related plays, sold the bulk of its public equity portfolio to Citadel in a distressed transaction to meet margin calls and stabilize operations. AUM reportedly fell sharply to the $8–10 billion range, with private holdings such as the Anthropic stake retained. Aschenbrenner issued an investor letter inviting fresh commitments starting August 1, framing the selloff as a buying opportunity, but credible reporting indicated limited uptake. The fund later deployed $400 million into chip-manufacturing startup Source Foundry, signaling ongoing deployment of capital but highlighting a shift toward illiquid private investments. These events created significant uncertainty around the ability to attract meaningful new outside capital on a tight timeline, with trader consensus reflecting doubts over rapid recovery from reputational and liquidity pressures. Upcoming catalysts include any post-August disclosures on inflows or further private deployments that could clarify the fund’s path forward.