{"slug": "ai-investors-are-suddenly-quaking-in-their-boots", "title": "AI Investors Are Suddenly Quaking in Their Boots", "summary": "Leopold Aschenbrenner, a 24-year-old German AI researcher and hedge fund manager, lost approximately $35 billion of investors' money in leveraged bets on AI infrastructure stocks during a July tech selloff, forcing him to cancel his honeymoon with Anthropic chief of staff Avital Balwit. According to Hedge Fund Research, tech funds dropped 7% in July, the worst period since the 2008 financial crisis, while Value Aligned Research Advisors slid 44%, intensifying fears of an AI bubble as Apollo chief economist Torsten Slok warned that AI profits are funded by investors rather than customers.", "body_md": "German AI researcher and hedge fund manager Leopold Aschenbrenner became the poster child for the hubris of an AI-obsessed Wall Street last month.\n\nSome [$35 billion of investors’ money](https://247wallst.com/investing/2026/08/10/25-year-old-lost-35-billion-of-his-investors-money-2-weeks-later-silicon-valley-insiders-are-lining-up-to-give-him-more-cash/), in the form of leveraged bets on AI infrastructure stocks, evaporated in front of the 24-year-old’s eyes as tech shares were hit by yet another major sell off.\n\nThe humbling couldn’t have come at a worse time. The funds vanished days before his wedding with Anthropic chief of staff Avital Balwit. According to the *New Yorker*, the two [had to cancel their honeymoon](https://www.newyorker.com/news/the-financial-page/what-does-the-humbling-of-leopold-aschenbrenner-mean-for-the-ai-bubble) as a result.\n\nAschenbrenner isn’t alone. According to new data from Hedge Fund Research, tech funds dropped by seven percent in July, the worst period for the investments since the depths of the 2008 global financial crisis, the [ Telegraph reports](https://www.telegraph.co.uk/business/2026/08/10/worst-period-in-nearly-20-years-hedge-funds-ai-stock-rout/).\n\nA separate hedge fund, called value Aligned Research Advisors, which shares a similar portfolio to Aschenbrenner’s, [similarly slid 44 percent in July](https://www.bloomberg.com/news/articles/2026-08-10/ai-focused-hedge-fund-vara-drops-44-in-july-on-stock-plunge) as tech stocks reeled from major volatility.\n\nThe bruising month has further compounded fears over a massive surge in AI spending with no clear path to profitability in sight. Investors have become wary of big tech companies’ [ever-higher capital expenditure forecasts](https://futurism.com/artificial-intelligence/google-ai-profits-finance-bubble-alphabet) as concerns over an AI bubble continue to mount.\n\nStaying on track and maintaining high profit margins has become a high risk high reward game.\n\n“When valuations are elevated, and positioning is concentrated, the difference between being on the right and wrong side of a trade can become unusually large — and very quickly,” Erlen Capital Management managing partner Bruno Schneller told the *Telegraph*. “Specialist technology strategies can generate exceptional returns when momentum and narrative are aligned, but they can also experience abrupt, leverage-amplified reversals when those conditions change.”\n\nThe game is far from over. Even Aschenbrenner’s fund has since recovered and his [making new investments](https://www.bloomberg.com/news/articles/2026-08-05/situational-awareness-returns-to-investing-with-400-million-bet) after being forced to unwind trades and sell major chunks of its holdings last month.\n\nYet how much longer the highly AI-leveraged stock market can sustain itself is anybody’s guess. In a [blog post](https://www.apollo.com/wealth/insights-news/insights/daily-spark/in-ai-the-41-percent-depends-on-the-59-percent) on Friday, Apollo chief economist Torsten Slok pointed out that those who reap the biggest profits, including companies making AI models, are massively depending on profits being “funded by investors rather than earned from customers.”\n\nPut simply, AI companies aren’t making any significant amount of money from providing a worthwhile product, but from “capital raised by the layer losing money,” per Slok.\n\n“Capital can bridge the gap for a while, but not indefinitely,” Slok argued. “And therein lies the risk: will the ROI show up for AI’s end customers fast enough to sustain the spending that is generating those upstream margins?”\n\n**More on AI:** *VC-Funded Startups Linked to Persistent Fraud*", "url": "https://wpnews.pro/news/ai-investors-are-suddenly-quaking-in-their-boots", "canonical_source": "https://futurism.com/artificial-intelligence/ai-investors-suddenly-quaking-boots", "published_at": "2026-08-11 14:50:00+00:00", "updated_at": "2026-08-11 14:52:11.152228+00:00", "lang": "en", "topics": ["artificial-intelligence", "ai-policy"], "entities": ["Leopold Aschenbrenner", "Anthropic", "Avital Balwit", "Hedge Fund Research", "Value Aligned Research Advisors", "Erlen Capital Management", "Bruno Schneller", "Torsten Slok"], "alternates": {"html": "https://wpnews.pro/news/ai-investors-are-suddenly-quaking-in-their-boots", "markdown": "https://wpnews.pro/news/ai-investors-are-suddenly-quaking-in-their-boots.md", "text": "https://wpnews.pro/news/ai-investors-are-suddenly-quaking-in-their-boots.txt", "jsonld": "https://wpnews.pro/news/ai-investors-are-suddenly-quaking-in-their-boots.jsonld"}}