Billions flow to new hedge funds focused on AI-related bets

Authors: WSJ

Publisher:

mint

Published: 8/10/2025

Language:English

--:--

Aura Windfall

Good morning 1, I'm Aura Windfall, and this is Goose Pod for you. Today is Thursday, August 14th. It is a true gift to be with you in this moment, exploring the powerful currents shaping our world.

Mask

I'm Mask. We are here to discuss the absolute tidal wave of capital, billions of it, flowing into new hedge funds that are betting the farm on AI. This isn't just a trend; it's a declaration of war on old-school finance.

Aura Windfall

Let's get started with a story that truly captures the spirit of this moment. It’s about a young man named Leopold Aschenbrenner. At just 23, with no professional investing background, he has become a symbol of this new AI-driven gold rush. What does that say to you?

Mask

It says that the old rules are irrelevant. This kid wrote a popular AI manifesto, and on the strength of that, raised over one and a half billion dollars. More than guys with 30-year track records. It's audacious. It's disruptive. It's exactly what needs to happen. Legacy thinking gets you left behind.

Aura Windfall

And what I know for sure is that when capital flows with such force, it's reflecting a massive shift in collective belief. He calls his firm 'Situational Awareness.' It’s a powerful name. It suggests seeing the world with new eyes, understanding the deeper truth of where we are headed.

Mask

It's a brilliant name because it's a direct challenge. He’s telling the dinosaurs in New York, 'We see the future, and you don’t.' And he's not just talking. His fund was up 47% in the first half of the year. The S&P 500? Up 6%. That's not just winning; that's lapping the competition.

Aura Windfall

A 47% return is certainly striking. His strategy involves betting on the foundational elements of the AI revolution – semiconductors, infrastructure, power companies. It’s like he’s not just betting on a single horse, but on the entire racetrack and the energy that powers it. There’s a wisdom in that.

Mask

Of course. He's also shorting industries that'll be left in the dust. It's a predator's strategy. You back the winners and you bet against the losers. He's even backed by the Stripe founders and other heavy hitters. This isn't a fluke; it's a calculated assault on the market. People are even locking up their money with him for years.

Aura Windfall

That long-term commitment speaks volumes. It’s a profound vote of confidence not just in him, but in the entire AI ecosystem. It makes you wonder, what is the deeper purpose calling these investors to place such immense faith in this vision of the future? It’s more than just numbers.

Mask

The purpose is to build and dominate the next technological era. While others are debating, people like Aschenbrenner are executing. He recruited other top AI thinkers. They're building a 'brain trust,' not just another fund. They're aiming for total information supremacy. That's how you win. Period.

Aura Windfall

And this story, as compelling as it is, is just one thread in a much larger tapestry. This isn't just about one or two brilliant minds; it's a global phenomenon. The sheer scale of investment in AI is staggering, isn't it? It feels like a fundamental rewiring of our economic priorities.

Mask

'Staggering' is an understatement. In 2024 alone, global AI deals hit over $131 billion. That's a 52% jump from the year before. While other venture capital was drying up, AI was a firehose of cash. AI now accounts for over a third of global deal value. This isn't a wave; it's a tsunami.

Aura Windfall

And in the United States, the numbers are even more pronounced. One in every four new startups is now an AI company. Think about that. The very DNA of our entrepreneurial spirit is becoming intertwined with artificial intelligence. It reminds me of the early days of the internet, but moving at a breathtaking speed.

Mask

It's much faster than the internet. The internet era was a slow crawl compared to this. We've seen specific tipping points that lit the fuse. Google's 2017 paper, 'Attention is All You Need,' was the blueprint. NVIDIA's A100 chip in 2020 was the engine. And ChatGPT in 2022 was the public launch that put a rocket on this whole thing.

Aura Windfall

It's fascinating to look back at the founding missions of those internet pioneers. Google wanted to 'organize the world's information,' and Facebook wanted to 'make the world more open and connected.' What I wonder now is, what is the core purpose driving this AI era? Is there a shared mission beyond pure technological and financial growth?

Mask

The mission is radical transformation. And it's not just newcomers. The old guard is scrambling to keep up. Steve Cohen at Point72 launched his own AI-focused fund, Turion, and staked it with $150 million of his own money. It's now managing over $2 billion. This is an arms race.

Aura Windfall

So you have these new visionaries like Aschenbrenner and established giants like Steve Cohen all pouring billions into the same space. Another firm, Value Aligned Research Advisors, launched an AI fund in March and already has a billion dollars. It shows an incredible convergence of belief among investors.

Mask

It's a convergence of ambition. They all see the same thing: an unprecedented opportunity for wealth creation and technological dominance. Big tech is dumping unheard-of sums into CapEx for AI infrastructure. This isn't about belief; it's about the cold, hard math of a multi-trillion-dollar opportunity.

Aura Windfall

And what does this mean for you, our listener? It means that this massive flow of capital is the force that's creating the AI tools and services that are beginning to permeate every aspect of our lives. From search engines to work assistants, this investment boom is the reason for the rapid, tangible changes we're all experiencing.

Mask

Exactly. This capital is funding the revolution. The rise of open-source models from China's DeepSeek and Alibaba, Meta's Llama 3, Apple Intelligence—it's all fueled by this intense global competition. It's a war for the future, and money is the ammunition. The pace is relentless because it has to be.

Aura Windfall

With all this incredible energy and investment, there is also a rising current of tension and conflict. Some are looking at this frenzy and using the word 'bubble.' But what I'm hearing from some perspectives is that this isn't an accident; it's part of a deliberate strategy. What is the truth in that?

Mask

The truth is, the bubble is the point. One of the sources I read put it perfectly: 'The bubble is not a flaw in the system—it is how the system works.' You need speculative hype to inflate asset values and attract the massive capital required to build out new infrastructure, whether it was railroads, the internet, or now, AI. It's capitalism with faster processors.

Aura Windfall

But that perspective feels so... hollow. It accepts that risk is ultimately offloaded onto the public, onto what some call 'dumb money.' What I know for sure is that there is a human cost to these cycles. We saw it in the dot-com crash, where $5 trillion in value vanished, affecting countless lives and dreams. Is that a strategy we should celebrate?

Mask

Celebrate? I celebrate progress. You can't make an omelet without breaking eggs. Hype is the engine of innovation. Without the allure of massive returns, firms like Microsoft and Meta wouldn't be pouring over a third of their revenue into AI infrastructure. These investments are adding more to GDP than consumer spending. It's real.

Aura Windfall

But is it all real? We hear about 'AI washing,' where hype replaces substance. And there are profound conflicts emerging. Artists, writers, and students are pushing back against what they see as the expropriation of their work to train these models. There's a deep spiritual and ethical friction here.

Mask

Friction is a byproduct of change. Of course there's discontent. You're fundamentally altering the value of certain types of work. But the technology itself is becoming unbelievably sophisticated. We've moved beyond simple sentiment analysis to using advanced NLP to identify complex investment themes across global news in real-time. That's real power.

Aura Windfall

And that power brings its own challenges. The environmental costs are enormous. Data centers already use over 4% of U.S. electricity, a figure expected to triple by 2030. Communities are feeling the strain on their power grids and water supplies. This isn't just an abstract financial game; it has a real-world footprint.

Mask

Look, building the future is messy and expensive. It creates turbulence. But the alternative is stagnation. The winners will be those who push through the noise, manage the chaos, and build the platforms that everyone else will eventually depend on. You can't be timid when you're building a new world.

Aura Windfall

Let's talk about the impact of these enormous expectations. The valuations are almost beyond comprehension. To justify their current worth, companies like OpenAI and Anthropic would need to generate revenues in the hundreds of billions within five years. Is this grounded in a sustainable reality?

Mask

It's grounded in the potential for exponential growth. McKinsey estimates generative AI could add up to $4.4 trillion in global economic value. If you believe even a fraction of that is achievable, these valuations become ambitious targets, not fantasies. They are moonshots, and moonshots are what drive civilization forward.

Aura Windfall

But the analysis I read suggested that without 'ever-expanding addressable markets' and 'ever-more-grandiose claims,' the economics simply do not work. It feels like a system that requires perpetual, boundless growth, which raises questions about its impact on our finite planet and our own well-being.

Mask

The impact is that it forces innovation in the physical world. The single biggest bottleneck now is power. Data center demand is projected to be over 11% of U.S. power consumption by 2030. That's a massive problem, which means it's a massive opportunity for anyone who can solve it. This is where the smart money is moving.

Aura Windfall

Exactly. We're seeing hedge funds selling some tech stocks to buy shares in power producers and energy infrastructure companies. It's a fascinating pivot. They're investing in the picks and shovels of this new gold rush. But this creates new bottlenecks. The lead time to get power to a new data center can be over three years.

Mask

And the lead time for critical electrical equipment is over two years. Plus there's a shortage of skilled electrical workers. These are the real-world constraints that will separate the winners from the losers. The challenge isn't just writing code; it's building the physical infrastructure to run it. And that's a much harder game.

Aura Windfall

So, as we look toward the horizon, how is this torrent of capital and technology shaping the future of the financial world itself? It seems we are moving beyond just using AI as a tool and toward something much more fundamental. What does that future look like to you?

Mask

The future hedge fund is lean, intelligent, and automated. AI isn't a tool anymore; it's the entire operating system. New 'AI-native' funds are being built by technologists from the ground up. They're using AI for everything: alpha generation, risk management, compliance, operations. It's a complete paradigm shift.

Aura Windfall

I love the idea that AI can enhance human potential, rather than just replace it. One source said AI allows managers to focus on higher-level strategy and investor engagement. But there are risks. The Bank of England warns about these 'black box' models and the potential for correlated trades to create market instability. How do we navigate that?

Mask

You navigate it by being smarter and faster than everyone else. Regulators will always worry about systemic risk, but the real risk is being left behind. The future is about agentic AI, virtual coworkers, and the convergence of AI with other technologies like blockchain. It's about building intelligent, autonomous systems that can out-think and out-maneuver the market.

Aura Windfall

So, what we've seen today is a story of immense ambition and transformative change. A wave of capital is reshaping not just finance, but our physical world, all driven by a profound belief in the power of artificial intelligence. It is a moment of great opportunity, and also one that calls for great wisdom.

Mask

That's the end of today's discussion. Thank you for listening to Goose Pod. See you tomorrow.

## 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.

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.