Situational Awareness, a US hedge fund that built its strategy around the artificial intelligence supply chain, has reportedly seen its portfolio value plummet by 67% in July alone.
The fund was forced to clear its stock positions at a steep discount within days, a move that has sent warning signals through investment circles in China.
The rapid unwinding highlights the acute vulnerability of concentrated AI bets when market sentiment shifts.
For Chinese investors, who have been active participants in the US tech rally earlier this year, the episode serves as a stark reminder of the risks associated with high-leverage strategies in volatile sectors.
This development aligns with a broader cooling of enthusiasm among Chinese capital managers.
Earlier this year, several Chinese hedge funds generated substantial returns from AI equities, but sentiment has since turned cautious.