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A 23-year-old with no prior professional investing experience has launched a $1.5bn (£1.1bn) hedge fund in less than a year. That’s faster than most veteran portfolio managers can unleash their most prized investment vehicles. What’s more, AI-focused fund returned 47% in the first six months of 2025 – trouncing the S&P 500’s 6% gain.
Soaring AI valuations are fuelling hedge funds betting on the boom. And some tech insiders may have an edge over seasoned finance professionals. So who is the mysterious AI analyst making waves on Wall Street?
A manifesto-turned money machine
Leopold Aschenbrenner is the founder of the San Francisco-based fund, Situational Awareness. He grew up in Germany and graduated Columbia University as valedictorian at age 19. He then worked briefly as an OpenAI researcher, before being pushed out over alleged leaks.
Aschenbrenner first announced his Wall Street ambitions in a provocative 165-page manifesto on the potential and risks of AI. “Everyone is now talking about AI, but few have the faintest glimmer of what is about to hit them,” he claims. “There are perhaps a few hundred people in the world who understand just how crazy things are about to get, who have the situational awareness.”
Situational Awareness is betting heavily on the infrastructure needed to power AI systems just as businesses prepare to pour millions into essential components, such as high-performance chips. The fund is targeting companies that will benefit from AI’s build-out, while shorting industries likely to be left behind.
AI products, Aschenbrenner claims, will become the “biggest revenue driver for America’s largest corporations, and by far their biggest area of growth.” The first $10tn company, he says, could emerge very soon and, when it does, big tech will funnel hundreds of billions of dollars into growing AI infrastructure, catalysing an “extraordinary techno-capital acceleration”.
The pitch has resonated with some of tech’s most influential figures. Patrick and John Collison, the founders of Stripe, Meta’s Daniel Gross and Nat Friedman, the former GitHub chief are backing Aschenbrenner.
And the buzz, as well as the early success, around Aschenbrenner’s fund signals a major shift in the wider financial markets.
Thematic investing is on the rise
Situational Awareness is a pure-play bet on AI infrastructure and critical components, including chips, data centers and power generation. Investors typically treat these areas as support sectors within broader categories such as tech or industrials. But thematic funds are now pushing capital to a small number of managers who have articulated clear paths forward.
Other AI-focused hedge funds, such as Value Aligned Research Advisors and Point72 Asset Management, have also amassed billions in contributions, reflecting growing investor demand for AI bets despite market volatility and overlapping positions in AI-adjacent companies. Such funds may help to write the next chapter of AI investing. But investor sentiment can sour quickly. Extreme thematic booms often end with sharp corrections. Consider the dotcom stocks in the late 1990s or renewable energy in the early 2010s.
The Deepseek selloff earlier this year highlights the risks of overconcentration. The unstoppable momentum fuelled by a few high-flying stocks can quickly reveal a glaring vulnerability if those stocks fail.
But Aschenbrenner proves that experience isn’t everything in today’s investment market. An unconventional founder with no prior Wall Street background, his deep domain expertise has proved compelling for investors. What might once have been seen as a liability among investors could now become a critical edge for new fund managers in the AI space.
The quiet rise of private credit
Behind the scenes, a shift in capital flows is amplifying the AI boom. As traditional banks retreat from financing certain types of projects, private credit funds have rushed in to fill the gap.
Private loans to the technology sector increased by $100bn (£74bn) over the past 12 months, reaching a total of $450bn (£334bn). Much of that has been directed toward the data centre build-outs of Meta, Amazon and OpenAI.
This reliance on non-bank financing is accelerating Silicon Valley’s commitment to AI, but it also creates plenty of risks. Analysts warn that the boom is being driven by opaque and untested borrowing, making the sector more fragile, less transparent and more difficult to regulate.
The AI bubble is a real risk
The willingness of investors to prioritise vision over track record can accelerate growth, but it can also amplify risk.
OpenAI’s boss, Sam Altman, has described AI as both a “bubble” and “the most important thing to happen in a very long time”. Investors, he argues, are “chasing a kernel of truth” but pushing valuations into “insane” territory.
Economists have spotted some worrying signs, too. Price-to-earnings ratios across tech are stretched to levels reminiscent of the late-1990s, when investor enthusiasm for internet-based companies led to a stock market crash. JP Morgan estimates that spending on data centres now contributes to a disproportionately high share of US GDP growth – about 10 to 20 basis points. Still, Altman insists that trillions will be spent on data infrastructure “in the not very distant future” – whether economists and sceptics deem it reckless or not.
The economist John Maynard Keynes warned that “markets can remain irrational longer than you can remain solvent.” Much like the tech boom in the 1990s, AI technology is generating massive amounts of capital into the sector. Even if the broader economy enters a slowdown or tips into recession, AI stocks will likely continue to climb, fuelled by narrative momentum and investor conviction.
But eventually reality will catch up. At some point, investors will demand proof that AI companies generate profits, not just attract capital. And, one day, AI providers will have to reconcile with good-old-fashioned finance fundamentals: revenue, margins and profitability.
A 23-year-old with no prior professional investing experience has launched a $1.5bn (£1.1bn) hedge fund in less than a year. That’s faster than most veteran portfolio managers can unleash their most prized investment vehicles. What’s more, AI-focused fund returned 47% in the first six months of 2025 – trouncing the S&P 500’s 6% gain.
Soaring AI valuations are fuelling hedge funds betting on the boom. And some tech insiders may have an edge over seasoned finance professionals. So who is the mysterious AI analyst making waves on Wall Street?
