JPMorgan Chase has ended its lending relationship with Situational Awareness, the AI-focused hedge fund run by former OpenAI researcher Leopold Aschenbrenner, a person familiar with the matter said. The bank was one of the fund's largest lenders.
The decision followed heavy losses on concentrated bets tied to artificial intelligence infrastructure. A broad selloff in global chip stocks hit the fund's leveraged positions and forced it to sell most of its public equity portfolio.
How the trade came apart
Situational Awareness built large positions in memory and storage names, including SK Hynix, which supplies high-bandwidth memory for AI accelerators. It also held short positions in software companies that moved against it.
As chip shares fell, prime brokers demanded more cash to cover margin requirements. Ken Griffin's Citadel stepped in and bought the fund's publicly traded assets, a deal sources described as a rescue of a distressed seller rather than a bet on the same positions.
The fund had grown to roughly $45 billion at its peak. It now runs far less, and Aschenbrenner has returned to buying options tied to AI shares, according to reports.
The wider memory market
The selloff came even as demand for AI hardware stayed strong. Memory makers have described 2026 as a supercycle driven by high-bandwidth memory, with capacity sold out in advance and prices high. That strength drew crowded, leveraged bets, and crowded trades can reverse fast when sentiment shifts.
Analysts point to the same dynamic in the equipment chain. New fabs, advanced packaging lines and vacuum-based deposition and etching tools take years to build, so a short-term price shock does not change the underlying supply picture.
What bankers are watching
Goldman Sachs, Citigroup and Bank of America remain active brokers to the fund, which suggests the unwind was contained. Even so, the episode shows how leverage can turn an AI conviction into a forced sale.
Investors are now watching whether the AI build-out keeps translating into earnings, or whether valuations outran the cash flows. The next round of chip earnings will shape that debate.
---
Reliable Ferrofluid Vacuum Rotary Feedthrough for Semiconductor Manufacturing
In semiconductor manufacturing, maintaining ultra-high vacuum integrity during rotary motion is critical — from single silicon crystal growth and CVD to sputtering and plasma etching. Ferrofluid Vacuum Rotary Shaft Feedthrough from FerrofluidTec delivers hermetically sealed rotary feedthroughs with leakage rates as low as 10⁻¹² Pa·m³·s⁻¹, vacuum degree up to 10⁻⁶ Pa, and customizable shaft diameters from 10mm to 100mm. Built with non-magnetic stainless steel housings and magnetic permeability stainless steel shafts, these feedthroughs provide reliable, maintenance-free sealing for demanding vacuum environments. Visit www.ferrofluidtec.com to learn more.