After a 67% loss, Situational Awareness backs chipmaking bottleneck

Leopold Aschenbrenner is putting another $400 million behind artificial intelligence just days after his hedge fund suffered one of its steepest setbacks.

The Wall Street Journal reported on August 7 that Situational Awareness has made an investment of $500 million in Source Foundry, which includes the company investing $400 million this week itself. Source Foundry started its operation in 2025 with Stanford researchers Abdulmalik Obaid and Joe Burg, and it has recently been assigned a market valuation of about $5 billion owing to the funding it has received from Sequoia Capital.

The timing makes the deal more significant than a conventional venture investment.

According to a letter to investors, Situational Awareness suffered an unaudited net month-to-date loss of 67% in July. While its net year-to-date returns were still at 80%, Aschenbrenner revealed that they sold part of their public portfolio to cut down on leverage following low liquidity conditions in the market.

However, the letter also clarified that the July fiasco did not alter his long-term view of AI. The fund will keep working as a hybrid public-private vehicle, while its public portfolio will be managed on a fully paid-for basis from now on, thus eliminating all margin or liquidation risks.

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