Archive · 6 Aug 2026
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.
Well-known hedge funds reported steep losses in July as AI shares tumbled, reversing momentum trades that had worked well through the spring.
Heavily leveraged Situational Awareness plunged 67% and sold most of its public equities book at a 10% discount to Ken Griffin's Citadel to meet margin calls.
PivotalPath's index tracking technology, media and telecom hedge funds fell 10% in July, the steepest drop among the firm's benchmarks.
Whale Rock Capital Management's flagship tech fund fell 21.7% in July, while Altimeter Capital Management's AI-focused fund dropped 11%.
Citadel's flagship fund climbed 5.9% in July, lifting its year-to-date gains to 12% and calming fears of broader AI selling.
- Who
- Well-known hedge funds, including Situational Awareness, Whale Rock Capital Management, Altimeter Capital Management, Tiger Global Management, Viking Global Investors, Millennium Management, Balyasny Asset Management, and Citadel.
- What
- Hedge funds suffered steep July losses as AI shares tumbled, forcing some to sell assets at a discount to meet margin calls.
- When
- July
- Where
- Not specified in the articles
- Why
- Investor concerns over the sustainability of massive corporate spending on AI triggered a sharp reversal in crowded momentum trades.
Correction, Not Collapse
Bubble Fears
Scope of the AI selloff
Correction, Not Collapse
The selloff trimmed only part of earlier gains — Whale Rock is still up 35.1% and Altimeter up 34% for the year — showing the AI trade remains strong.
Bubble Fears
July was a harsh reversal: the TMT hedge fund index fell 10% in a single month and one leveraged fund plunged 67%, exposing how crowded the bets had become.
AI spending sustainability
Correction, Not Collapse
Citadel's purchase of the discounted portfolio and the calming of investor jitters suggest the turbulence was an opportunity, not a turning point.
Bubble Fears
Investor worries that massive corporate AI spending is unsustainable drove the rout and may continue to weigh on AI stocks.
- Situational Awareness July loss
- -67%
- Citadel flagship fund July gain
- +5.9%
- Citadel year-to-date gain
- +12%
- PivotalPath TMT hedge fund index July return
- -10%
- Whale Rock flagship tech fund July return
- -21.7% (year-to-date +35.1%)
- Altimeter AI fund July return
- -11% (year-to-date +34%)
- Tiger Global long/short fund July return
- -4.8% (year-to-date +9.4%)
- Portfolio sale discount to Citadel
- 10%