AI Stock Selloff Cripples High-Profile Hedge Funds

A broad selloff in artificial intelligence and semiconductor stocks during July severely impacted returns for several prominent investment firms. Investor concerns regarding the scale of AI infrastructure spending drove the volatility, leading to sharp declines across various high-profile funds.

Whale Rock Capital Management experienced one of the steepest hits, with its flagship fund recording a 21.7% drop in July. This decline slashed the firm's year-to-date gains from 72.5% to 35.1%. Other firms faced notable losses, including Point72 Asset Management's Turion fund, which fell 11.4%, and Coatue Management, which saw its worst return in over a year with an 8.3% decline.

The volatility culminated in the collapse of Situational Awareness, an AI-focused fund that lost 67% of its value in July. To satisfy margin calls, Situational Awareness sold the majority of its public stock portfolio to Citadel LLC.