Situational Awareness, the $20bn hedge fund founded by former OpenAI employee Leopold Aschenbrenner, is raising fresh capital after heavy losses amid the AI stock rout. Banks like Goldman Sachs and JPMorgan asked clients to post more collateral to guard against concentration risk as Nasdaq slipped into correction territory.

Hedge funds had bet heavily on AI, backing chipmakers such as SK Hynix and its rival Sandisk. A Goldman Sachs report showed 16% of its prime brokerage book exposed to cyclical memory stocks—up from less than 2% a year earlier. SK Hynix’s US debut drew interest from Aschenbrenner’s fund, but the stock has since fallen 24%, and peers like Sandisk and Intel dropped 54% and 39% from peaks.

Credit default swaps tied to giants like Nvidia, Broadcom, and Oracle hit record highs. Oracle’s 5‑year CDS rose to 215 bps, costing investors $215,000 per $10 million of debt. With a planned $70bn data‑centre spend, Oracle was downgraded to triple‑B‑minus, raising questions about the sustainability of AI‑driven capital outlays.

The AI trade now faces a gravity point: will perpetual capital spending yield positive cash flow again?