Affected by the sharp drop in AI stocks, several well-known hedge funds reported huge losses in July. The most notable of these was the highly leveraged fund Situational Awareness, which sold most of its stock portfolios to Ken Griffin's castle at extremely low prices. Situational Awareness plummeted 67% last month, and the fund sold most of its listed stocks in order to meet additional margin requirements. Investors' concerns about the sustainability of companies' huge spending in the AI field are also putting pressure on the sector. Although other funds did not suffer such heavy losses, July also marked a clear reversal of transactions that had been very beneficial to investors until now. According to research firm PivotalPath, hedge funds have historically relied heavily on momentum trading, crowded long positions, and stock market returns. The company's index tracks hedge funds that trade tech, media, and telecom stocks. The index fell 10% last month alone, the biggest drop of any of the company's benchmark indices. Whale Rock Capital Management's flagship technology hedge fund fell 21.7% in July, erasing about half of the increase since this year, according to a source familiar with the matter. Artificial intelligence-focused hedge funds operated by Altimeter Capital Management fell 11% last month.

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