A major AI investor’s hedge fund just suffered a 67% plunge after leveraged bets on the sector collapsed, forcing a fire sale of public stocks and wiping out borrowed capital — echoing past Wall Street disasters like the dot-com bubble and LTCM. Though early and visionary in predicting trillions in AI spending, Leopold Aschenbrenner’s strategy was undone by leverage’s brutal downside: when assets fall, lenders demand collateral fast, triggering panic selling even if the long-term thesis remains intact. The fund now holds onto private stakes like Anthropic while exiting public equities — a classic tale where brilliance meets market mechanics, and timing matters more than insight.
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