AS valuations for companies like Nvidia and OpenAI soar, investments in AI-focused hedge funds are surging, The Wall Street Journal reported yesterday.
Leopold Aschenbrenner, a 23-year-old AI influencer, has rapidly become a key figure in the industry. After gaining attention with a popular manifesto, he launched Situational Awareness, a San Francisco-based hedge fund that now manages more than $1.5 billion.
With no professional investing experience, Aschenbrenner quickly raised significant capital, attracting investors with his strategy of targeting stocks poised to benefit from AI, such as semiconductor and infrastructure companies, while hedging with short bets on lagging sectors.
In the first half of the year, Situational Awareness posted a 47 per cent return, far outpacing the S&P 500’s (SP500) 6pc gain. Aschenbrenner, who previously worked at OpenAI, named his firm after a 165-page essay he wrote on artificial superintelligence. His backers include prominent figures like Stripe’s Collison brothers and Meta’s AI leaders.
In addition to Aschenbrenner’s success, new AI hedge funds are rapidly emerging, the Journal reported. Value Aligned Research Advisors launched in March and quickly amassed $1bn in assets. The fund, led by former quants Ben Hoskin and David Field, is also managing $2bn across various AI strategies. Similarly, Steve Cohen’s Point72 has backed the AI fund Turion, now with over $2bn in assets.
These thematic funds are responding to investor demand, similar to previous surges in clean energy and ESG-focused funds. However, while the AI space holds long-term promise, recent market volatility, including a drop in AI stock valuations, shows the fragility of these investments.
AI hedge funds often cluster around the same high-profile stocks. Vistra, a power supplier to AI data centres, was a major holding for both Situational Awareness and VAR Advisors as of March. Meanwhile, venture-capital funds focused on private AI companies, like Atreides Management and Valor Equity Partners, are also capitalizing on the boom.
The AI hedge fund space is also attracting comeback stories. Sean Ma, after winding down his previous firm, is now raising funds for an AI-focused hedge fund, marking a new chapter in the industry’s rapid evolution, the Journal reported.
&uuid=(email))