Embattled hedge fund invests $400M in chip startup Source Foundry

Situational Awareness, the AI-focused hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, invested $400 million this week in Source Foundry, a startup founded by Stanford researchers that is working to make chip manufacturing — the process of fabricating semiconductors — faster and cheaper, according to a report from The Wall Street Journal. The new investment brings Situational Awareness’s total stake in the chip startup to $500 million, making it one of the fund’s largest disclosed bets even as its broader public-markets portfolio has struggled.

Aschenbrenner launched Situational Awareness in 2024, while still in his mid-twenties and with no prior trading experience, after leaving a research role at OpenAI. The fund’s early returns were reportedly strong, but it has since suffered steep losses amid a decline in AI-infrastructure stocks. At the end of July, Situational Awareness sold off the majority of its public stock and bond holdings to Ken Griffin’s hedge fund, Citadel, though it held on to its shares in Anthropic. The fund’s assets under management — the total value of the investments it oversees for clients — reportedly fell from $20 billion to $10 billion over that period, even as its bet on Source Foundry’s chip-manufacturing technology kept growing.

Despite the losses, the report noted, Aschenbrenner did not let the setbacks get in the way of his wedding.

Why it matters

The deal shows AI-focused investors still betting heavily on chip-manufacturing infrastructure even as the broader AI-infrastructure trade sours, with a hedge fund shrinking its liquid public holdings while doubling down on a single private chipmaking startup it has now put a total of $500 million behind.