--- title: "AI Investors Are Suddenly Quaking in Their Boots" description: "According to new data, tech funds dropped by seven percent in July, the worst period for them since the 2008 global financial crisis." date: "2026-08-11" modified: "2026-08-11" authors: - name: "Victor Tangermann" job_title: "Senior Editor" link: "https://futurism.com/authors/victor" url: "https://futurism.com/artificial-intelligence/ai-investors-suddenly-quaking-boots" categories: - "Artificial Intelligence" - "Ethics" - "Finance" - "Future Society" - "Investing" --- # AI Investors Are Suddenly Quaking in Their Boots ![Stressed Stock Exchange Trader Can't Apprehend a Sudden Stock Market Collapse.]() *Shutterstock / Futurism* German AI researcher and hedge fund manager Leopold Aschenbrenner became the poster child for the hubris of an AI-obsessed Wall Street last month. Some [$35 billion of investors' money](), in the form of leveraged bets on AI infrastructure stocks, evaporated in front of the 24-year-old's eyes as tech shares were hit by yet another major sell off. The humbling couldn't have come at a worse time. The funds vanished days before his wedding with Anthropic chief of staff Avital Balwit. According to the *New Yorker*, the two [had to cancel their honeymoon]() as a result. Aschenbrenner isn't alone. According to new data from Hedge Fund Research, tech funds dropped by seven percent in July, the worst period for the investments since the depths of the 2008 global financial crisis, the [*Telegraph* reports](). A separate hedge fund, called value Aligned Research Advisors, which shares a similar portfolio to Aschenbrenner's, [similarly slid 44 percent in July]() as tech stocks reeled from major volatility. The bruising month has further compounded fears over a massive surge in AI spending with no clear path to profitability in sight. Investors have become wary of big tech companies' [ever-higher capital expenditure forecasts]() as concerns over an AI bubble continue to mount. Staying on track and maintaining high profit margins has become a high risk high reward game. "When valuations are elevated, and positioning is concentrated, the difference between being on the right and wrong side of a trade can become unusually large — and very quickly," Erlen Capital Management managing partner Bruno Schneller told the *Telegraph*. "Specialist technology strategies can generate exceptional returns when momentum and narrative are aligned, but they can also experience abrupt, leverage-amplified reversals when those conditions change." The game is far from over. Even Aschenbrenner's fund has since recovered and his [making new investments]() after being forced to unwind trades and sell major chunks of its holdings last month. Yet how much longer the highly AI-leveraged stock market can sustain itself is anybody's guess. In a [blog post]() on Friday, Apollo chief economist Torsten Slok pointed out that those who reap the biggest profits, including companies making AI models, are massively depending on profits being "funded by investors rather than earned from customers." Put simply, AI companies aren't making any significant amount of money from providing a worthwhile product, but from "capital raised by the layer losing money," per Slok. "Capital can bridge the gap for a while, but not indefinitely," Slok argued. "And therein lies the risk: will the ROI show up for AI's end customers fast enough to sustain the spending that is generating those upstream margins?" **More on AI:** [*VC-Funded Startups Linked to Persistent Fraud*]() ## Author I've been at Futurism since 2017, where my role has evolved to encompass design, writing, and increasingly editing. I've always been fascinated by space exploration and advanced transportation, which I've leaned into by interviewing luminaries in those fields while closely following the dimensions of policy and regulation that allow next-generation projects to succeed -- or, sometimes, to fail. I'm also keenly interested in the effects of generative AI on society, policies, and democratic institutions, as well as clean energy, physics and biology, and the vagaries of tech leadership. My work for Futurism has been cited by publications including Ars Technica, Gizmodo, PC Magazine, Jalopnik, Fox News, and the New York Post. I spent my childhood living in locations including Manila, the Philippines, and Geneva, Switzerland, attended McGill University, and now live in Toronto, Canada. Before Futurism I worked at AskMen and a small photography studio. In my free time, I'm an avid gardener, foodie, and craft beer lover, as well as a maker of artisanal hot pepper sauces. I have a magnificent dog named Freida. ### Author social links [Bluesky]()