## Billions Flow to New Hedge Funds Focused on AI-Related Bets **Report Provider:** mint (WSJ) **Published At:** 2025-08-10 15:30:12 **Topic:** Artificial Intelligence, Hedge Funds, Stock Picking, AI Technology ### Executive Summary The artificial intelligence (AI) sector is experiencing a surge in investment, with a new wave of hedge funds emerging to capitalize on the booming valuations of AI companies. Notably, a 23-year-old former OpenAI researcher, Leopold Aschenbrenner, has rapidly raised over $1.5 billion for his San Francisco-based firm, Situational Awareness. The fund, which focuses on global stocks benefiting from AI development, has delivered impressive returns, significantly outperforming the S&P 500 and a tech hedge fund index in the first half of the year. This trend is mirrored by other new AI-focused funds, such as Value Aligned Research Advisors' fund and Steve Cohen's Turion, indicating a broader industry shift towards AI-themed investments. However, the article also highlights the potential fragility of these valuations and the challenges of successfully trading thematic trends. ### Key Findings and Trends * **Rapid Influx of Capital into AI Hedge Funds:** The AI boom has attracted substantial investment into specialized hedge funds, with several new launches quickly amassing billions in assets. * **Young Influencers Leading the Charge:** Precocious individuals with deep AI knowledge, like Leopold Aschenbrenner, are successfully launching and managing significant hedge funds, often bypassing traditional industry experience. * **Impressive Early Performance:** Situational Awareness, managed by Aschenbrenner, reported a 47% gain after fees in the first half of the year, significantly outperforming broader market indices. * **Diversified AI Investment Strategies:** Funds are investing in a range of AI-related assets, including semiconductor and infrastructure companies, AI startups (like Anthropic), and even private AI companies. Some also employ short bets on industries potentially left behind by AI advancements. * **Veteran Hedge Fund Involvement:** Established players like Steve Cohen are also launching AI-focused funds, signaling the mainstreaming of this investment theme. * **Demand for Long-Term Commitments:** Many investors are agreeing to lock up their capital for extended periods, demonstrating strong conviction in the long-term AI trend. * **Concentration Risk:** With a limited number of publicly traded AI-adjacent companies, many AI-focused funds tend to invest in similar positions, potentially leading to concentration risk. * **Thematic Investing Volatility:** The article draws parallels to past thematic investment trends, such as clean energy and ESG, noting that investor tastes can be fickle and that identifying a winning theme doesn't guarantee successful trading. ### Key Statistics and Financial Data * **Situational Awareness:** * Manages over **$1.5 billion** in assets. * Gained **47%** after fees in the first half of the year. * **S&P 500:** * Gained approximately **6%** (including dividends) in the first half of the year. * **Tech Hedge Fund Index (compiled by PivotalPath):** * Gained about **7%** in the first half of the year. * **Value Aligned Research Advisors (VAR):** * Launched an AI-focused fund in March that has amassed about **$1 billion** in assets. * Manages about **$2 billion** in other AI-focused investment strategies. * **Turion (Steve Cohen's AI-focused fund):** * Assets now exceed **$2 billion**. * Up about **11%** this year through July. * Gained about **7%** last month (prior to July). * **Snow Lake Capital (Sean Ma's former firm):** * Agreed to pay about **$2.8 million** to settle SEC charges. ### Notable Individuals and Firms * **Leopold Aschenbrenner:** 23-year-old influencer and founder of Situational Awareness. Previously worked as a researcher at OpenAI. * **Situational Awareness:** A San Francisco-based hedge fund managed by Aschenbrenner, described as a "brain trust on AI." * **Carl Shulman:** Director of research at Situational Awareness, formerly worked at Peter Thiel's macro hedge fund. * **Backers of Situational Awareness:** Patrick and John Collison (Stripe founders), Daniel Gross, Nat Friedman (Meta AI efforts), and Graham Duncan (Sohn Investment Conference organizer). * **Value Aligned Research Advisors (VAR):** Investment firm founded by Ben Hoskin and David Field, managing AI-focused funds. * **Dustin Moskovitz:** Facebook co-founder whose philanthropic foundation is an investor in VAR. * **Steve Cohen:** Founder of Point72 Asset Management, backing the Turion fund. * **Eric Sanchez:** Portfolio manager at Point72, tasked with starting the Turion fund. * **Turion:** AI-focused hedge fund launched by Point72. * **Gavin Baker:** Manager at Atreides Management, which partnered with Valor Equity Partners for a venture-capital fund investing in AI. * **Sean Ma:** Former head of Snow Lake Capital, now fundraising for an AI hedge fund at M37 Management. ### Risks and Concerns * **Fragility of Valuations:** The market swoon following the release of DeepSeek's language model highlights the potential volatility and fragility of AI company valuations. * **Fickle Investor Tastes:** Similar to past thematic investment trends, investor interest in AI could wane, impacting the performance of these specialized funds. * **Concentration Risk:** As many funds pile into the same AI-adjacent companies, there's a risk of over-concentration in a limited set of assets. * **Execution Risk:** Identifying a winning investment theme is distinct from successfully trading it, and the ability of these new funds to navigate market complexities remains to be seen. ### Conclusion The emergence of numerous AI-focused hedge funds, backed by significant capital and led by influential figures in the AI space, underscores the immense investor interest in the sector. While early performance has been strong, the long-term success of these funds will depend on their ability to navigate the inherent volatility and concentration risks associated with thematic investing, as well as the continued, albeit potentially bumpy, development and adoption of AI technology.
Billions flow to new hedge funds focused on AI-related bets
Read original at mint →Leopold Aschenbrenner emerged last year as a precocious artificial-intelligence influencer after publishing a widely read manifesto. Then he decided to try his hand at stock picking. The 23-year-old with no professional investing experience quickly raised more money for a hedge fund than most pedigreed portfolio managers can when they strike out on their own.
As valuations of Nvidia, OpenAI and other artificial-intelligence companies continue to soar, so do investments in hedge funds hoping to ride the AI wave. Aschenbrenner’s San Francisco-based firm, Situational Awareness, now manages more than $1.5 billion, according to people familiar with the matter.
He has described the firm as a “brain trust on AI." His strategy involves betting on global stocks that stand to benefit from the development of AI technology, such as semiconductor, infrastructure and power companies, along with investments in a few startups, including Anthropic. He told investors he plans to offset those with smaller short bets on industries that could get left behind.
Situational Awareness gained 47% after fees in the first half of the year, one of the people said. In the same period, the S&P 500 gained about 6%, including dividends, while an index of tech hedge funds compiled by research firm PivotalPath gained about 7%. Aschenbrenner, a native of Germany, briefly worked as a researcher at OpenAI before being pushed out.
He named Situational Awareness after the 165-page essay he wrote about the promise and risks of artificial superintelligence. He recruited Carl Shulman, another AI intellectual who used to work at Peter Thiel’s macro hedge fund, as director of research. The firm’s backers include Patrick and John Collison, the billionaire brothers who founded payments company Stripe, as well as Daniel Gross and Nat Friedman, whom Mark Zuckerberg recently recruited to help run Meta’s AI efforts.
Graham Duncan, a well-known investor who organizes the Sohn Investment Conference, is an adviser. “We’re going to have way more situational awareness than any of the people who manage money in New York," Aschenbrenner told podcaster Dwarkesh Patel last year. “We’re definitely going to do great on investing."
In another sign of the demand for Aschenbrenner’s services, many investors agreed to lock up their money with him for years. Other recent launches include an AI-focused hedge fund from Value Aligned Research Advisors, a Princeton, N.J.-based investment firm founded by former quants Ben Hoskin and David Field.
The fund, launched in March, has already amassed about $1 billion in assets, a person familiar with it said. VAR also manages about $2 billion in other AI-focused investment strategies. VAR’s investors have included the philanthropic foundation of Facebook co-founder Dustin Moskovitz, according to regulatory filings reviewed by fund-data tracker Old Well Labs.
Veteran hedge-fund firms are entering the fray, too. Last year, Steve Cohen tapped one of his portfolio managers at Point72 Asset Management, Eric Sanchez, to start an AI-focused hedge fund that Cohen planned to stake with $150 million of his own money. Assets at the fund, called Turion—after AI theorist Alan Turing—now exceed $2 billion, people familiar with the matter said.
Turion is up about 11% this year through July after it gained about 7% last month, the people said. It is no surprise that thematic funds are springing up to capitalize on the AI frenzy. In years past, hedge funds that specialized in the transition to clean energy and investing with an environmental, social and corporate-governance lens proliferated in response to client demand.
Identifying a winning theme isn’t the same thing as trading it well. Investors’ tastes can be fickle; many prominent ESG hedge funds have either shrunk or gone out of business. The market swoon that followed the January release of an advanced, low-cost language model from Chinese company DeepSeek showed the fragility of the valuations of AI winners, though the market has roared back since then.
AI-focused investors argue the long-term trend of development and adoption are inevitable, even if there are bumps along the way. With only so many publicly traded companies that operate in the AI-adjacent economy today, stock picking funds often pile into the same positions as one another and more generalist hedge funds.
Vistra, a power producer that supplies the juice to AI data centers, was a top-three U.S. position of both Situational Awareness and VAR Advisors as of March 31, according to their most recent securities filings. Other hedge-fund managers are debuting funds to make investments in privately held AI companies and startups.
Gavin Baker’s Atreides Management teamed up with Valor Equity Partners to launch a venture-capital fund earlier this year that has raised millions from investors including Oman’s sovereign-wealth fund. Each firm separately invested in Elon Musk’s xAI. At least one portfolio manager is planning an AI hedge fund as a comeback vehicle.
Sean Ma wound down his Hong Kong-based firm, Snow Lake Capital, after it agreed to pay about $2.8 million to settle Securities and Exchange Commission charges last year that the firm participated in stock offerings of companies that it had also bet against. Ma took over an investment firm called M37 Management in Menlo Park, Calif.
, earlier this year. He is currently fundraising for a hedge fund focused on AI software and hardware.
