On the morning of July 28, 2026, Jim Cramer told CNBC viewers to exit any data center trade bought on borrowed money: “If you’re borrowing money to buy something related to the data center, then tomorrow morning, 9:30 a.m., sell it no matter what.” The day before, he had posted on X that an intraday reversal in chip stocks would be “very difficult to reverse” because the sellers were “monstrous, motivated and often margined.” Two days later, on July 30, the most talked-about AI hedge fund on Wall Street ceased to exist as a public equities vehicle.
Situational Awareness LP, run by 24-year-old former OpenAI researcher Leopold Aschenbrenner, was forced to sell its entire public equity book, more than $10 billion in value, to Ken Griffin’s Citadel after margin calls from its three prime brokers: Goldman Sachs, JPMorgan Chase, and Bank of America.
The Wunderkind Trade
Aschenbrenner enrolled at Columbia at 15 and graduated valedictorian in 2021 with degrees in economics and mathematics-statistics. He conducted long-term risk research at Oxford’s Global Priorities Institute, then joined OpenAI’s Superalignment team, and was fired in April 2024 over an alleged information leak he disputes. His June 2024 essay Situational Awareness: The Decade Ahead, which argued AGI by roughly 2027 is “strikingly plausible,” made him a minor celebrity before he ever managed outside money.
The fund launched in late 2024 with a few hundred million dollars from backers including Stripe’s Patrick and John Collison, former GitHub chief Nat Friedman, and investor Daniel Gross. By this summer, assets peaked near $45 billion, on returns of more than 1,000% since inception and 439% in the first half of 2026 alone. The strategy was elegant: long AI infrastructure names such as SK Hynix, short software incumbents including Adobe, all financed at roughly 4x leverage.
The Trade That Broke
Both legs unwound simultaneously. From June 22 through July 30, Marvell Technology fell 40.44%, part of a broader reversal across the AI-networking complex. NVIDIA (NASDAQ:NVDA | NVDA Price Prediction), whose shares slid 6.52% over the same window to $195.04, dragged the whole basket lower. SK Hynix, the fund’s largest single long, moved with them.
The short side hurt more. Adobe (NASDAQ:ADBE) rallied 27.19% from June 22 to July 30, closing at $247.90, after posting record Q2 revenue of $6.62 billion and AI-first annual recurring revenue that tripled year over year past $500 million. Marvell Technology (NASDAQ:MRVL) shows how narrow the pain was: even after its recent collapse, the stock is up 116.01% year to date. The VIX jumped 13.5% on July 29 to 20.66, an unusually sharp one-day move consistent with forced liquidation.
At 4x leverage, longs down roughly 40% and shorts up roughly 27% amounts to a wipeout. Prime brokers made their calls; Citadel took the book.
What Remains, and What to Watch
Situational Awareness keeps its private positions, including a roughly $5 billion stake in Anthropic, and will continue as a private-only vehicle. On July 30, Cramer said the blowup “reveals the hidden risks of leverage” and claimed, in a retrospective note investors should weigh as his own framing, that “For two weeks, I’ve been telling you to get off margin, stop using borrowed money.”
The lesson is narrower than headlines suggest. NVIDIA still guided Q2 revenue to $91 billion, Marvell’s data center segment still grew, and Adobe raised its full-year outlook. What broke was a 24-year-old running $45 billion at 4x leverage with a paired long-short book that assumed two correlated moves would never happen in the same month, not the underlying AI trade itself. They did. The next signal to watch is whether other multi-strategy funds running similar AI-infrastructure-long, software-short pairs are quietly cutting gross exposure into August, or whether Citadel’s willingness to warehouse the book at scale means the shock stays contained.
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