AI-stock rebound likely came too late to save hedge funds’ July returns

Business Insider reports that many big-name, tech-focused hedge funds had a strong first half before July turned difficult. AI-linked stocks including SanDisk, Bloom Energy, and CoreWeave fell sharply in mid-July, while Google and Meta saw minor sell-offs tied to rising AI and compute spending. Large chipmakers including TSMC and Micron were also dragged down.

After weeks of losses and margin calls from bank partners, Leopold Aschenbrenner was forced to sell the bulk of his publicly traded equity holdings, according to the report. Citadel bought the stock portfolio after beating out Millennium and Jane Street. The unloading by Situational Awareness sent several AI infrastructure names higher and created a rapid shift in market tone.

The rally was a relief for investors exposed to the same names, but Business Insider reports it likely came too late to rescue many funds’ July returns. The article notes that some funds may still be up for the year because of strong first-half performance. Situational Awareness lost 67% in July but was still up 80% year to date, according to a person familiar with the fund cited by Business Insider.

Whale Rock Capital added to SanDisk and Bloom Energy stakes in the first quarter, and both stocks jumped more than 20% on Thursday, though SanDisk remained roughly 45% below where it started July and Bloom Energy was still down about 30% as of midday Friday. Atreides Management and Altimeter Capital added to CoreWeave positions in the first quarter, and CoreWeave rose more than 20% after the portfolio sale, but the rebound erased only a fraction of its July losses. TSMC and Lam Research also got a boost, with Lam up more than 10% Thursday while still likely ending July down close to 30%.