Leopold Was Right About AI… And Still Lost Billions
Have you heard of Leopold Aschenbrenner?
Have you heard of Leopold Aschenbrenner?
There is an old saying on Wall Street:
“The market can stay irrational longer than you can stay solvent.”
Few recent stories illustrate this lesson better than that of Leopold Aschenbrenner.
If you haven’t heard of him, you probably will.
Leopold is considered one of the brightest young minds in artificial intelligence. He graduated from Columbia University at an unusually young age, worked with the FTX Future Fund, and later joined OpenAI’s Superalignment Team, where he worked alongside some of the world’s leading AI researchers on the long-term implications and safety of artificial intelligence.
In 2024, his career took an unexpected turn. He left OpenAI after a public dispute with the company and soon afterward published a 165-page essay titled “Situational Awareness: The Decade Ahead.”
The paper quickly became one of the most widely discussed essays in Silicon Valley and among institutional investors.
His thesis was bold.
Leopold argued that the world was dramatically underestimating how quickly artificial intelligence would advance. If he was right, the biggest investment opportunity wouldn’t necessarily be AI software companies—it would be the businesses supplying the infrastructure that makes AI possible.
Think about what every AI model needs to operate:
Powerful GPUs like those produced by NVIDIA.
Massive data centers.
High-speed networking equipment.
Memory chips.
Electricity and power generation.
Cooling systems.
Semiconductor manufacturing.
His argument was simple: if AI demand exploded, every one of these industries would experience unprecedented growth.
Many respected investors agreed.
The essay attracted enormous attention throughout Silicon Valley. Well-known entrepreneurs, technology executives, venture capitalists, and family offices backed his vision, allowing him to launch an investment fund centered around this AI infrastructure theme.
His conviction was extraordinary.
Instead of making a modest bet, the fund reportedly used significant leverage to build nearly $45 billion in market exposure. The idea was that if AI infrastructure continued appreciating, returns could be amplified dramatically.
Then the market reminded everyone that timing matters.
Earlier this year, AI-related stocks experienced a sharp correction. Many of the companies tied to AI infrastructure declined together. Under normal circumstances, a diversified portfolio could likely survive such a pullback.
But leverage changes everything.
When borrowed money is involved, a 15% or 20% decline can become far more damaging. Lenders demand additional collateral, financing becomes more expensive, and investors can be forced to liquidate positions regardless of their long-term conviction.
That is exactly what happened.
Reports indicate the fund was forced to unwind a substantial portion of its portfolio. During the liquidation, Citadel, one of the world’s largest and most sophisticated hedge funds, reportedly purchased much of the fund’s public equity holdings, allowing those positions to transfer to a stronger balance sheet capable of weathering the volatility.
What makes this story fascinating is that Leopold’s investment thesis may still prove correct.
Artificial intelligence continues to transform industries at an astonishing pace. Demand for computing power, semiconductor manufacturing, networking equipment, electricity, and data center capacity continues to grow.
His prediction may ultimately play out almost exactly as he envisioned.
The problem wasn’t necessarily the thesis.
The problem was the amount of leverage used to express it.
The Grow Your Pile Lesson
This story perfectly captures one of the core philosophies we teach at Grow Your Pile.
Your first objective as an investor is not to maximize returns. It is to survive.
At Grow Your Pile, we spend far more time discussing buying power, portfolio delta, position sizing, and risk management than we do predicting where the S&P 500 will be next month.
Why?
Because a correct forecast has very little value if poor risk management forces you out of the trade before your thesis has time to work.
Whether you sell options, own stocks, invest in real estate, or manage a diversified portfolio, the principles never change:
Great ideas deserve disciplined position sizing.
Conviction should never replace risk management.
Avoid leverage that can force decisions during temporary market declines.
Keep enough liquidity to weather volatility.
Build a portfolio that can survive the unexpected.
The greatest investors in history didn’t succeed because they were always right.
They succeeded because they stayed in the game long enough for the law of large numbers to work in their favor.
Leopold Aschenbrenner’s story is not a story about failure.
It is a story about the difference between being right and being able to stay right long enough for the market to agree with you.
That may be one of the most valuable investing lessons any of us can learn.
Happy Trading,
Tony Rihan & Tony Battista
Grow Your Pile