Hedge Funds Take Steep July Losses as AI Stocks Tumble

Hedge funds are big investment companies that manage money for wealthy people and institutions.

In July, many of them lost a lot of money.

This happened because stocks of companies that make artificial intelligence, or AI, went down in price.

One fund, called Situational Awareness, had borrowed money to buy even more stocks.

When the prices dropped, it lost 67% of its value in just one month.

It had to quickly sell most of its stocks to pay back the money it owed.

Another company, called Citadel, bought those stocks for 10% less than they were worth.

That deal helped Citadel's main fund go up by 5.9% in July.

Some other famous funds, like Whale Rock and Altimeter, also went down, but they are still up a lot for the whole year.

The month showed that when many investors make the same bet, a sudden change can cause big losses.