Investor Ross Gerber said Tuesday that the July technology selloff appears to have been driven more by the forced unwinding of former OpenAI researcher Leopold Aschenbrenner‘s AI-focused hedge fund Situational Awareness than deteriorating fundamentals.

Experience Matters, Gerber Says

Gerber Kawasaki CEO said in a post on X that the collapse of Situational Awareness offered a broader lesson for investors, with experience proving invaluable when leverage magnifies market swings.

“Feels like the whole July tech correction was just to take Leo’s money,” Gerber said.

“Citadel now up well over a billion in a week taking this kid’s money… there is a lesson here to learn… experience matters.”

The investor had earlier criticized Situational Awareness’ use of leverage, warning that excessive borrowing could quickly erase years of gains while creating buying opportunities for long-term investors.

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Forced Liquidation Reshaped the AI Trade

The fund was forced to unwind much of its public equity portfolio during the July AI selloff, with Ken Griffin‘s Citadel LLC. purchasing the bulk of the assets.

The hedge fund had reportedly grown to about $20 billion after returning 439% net through June before its leveraged strategy unraveled.

AI Stocks Recover As Liquidation Pressure Fades

CNBC’s Jim Cramer said Intel Corp. (NASDAQ:INTC) suffered “some of the most hideous selling” he had witnessed despite reporting one of the strongest quarters of the earnings season, adding that the stock “belongs at $110” before the liquidation distorted prices.

Since then, Wall Street’s concerns over AI spending have eased, with companies like Amazon.com, Inc. (NASDAQ:AMZN) and Microsoft Corp. (NASDAQ:MSFT) reporting stronger-than-expected earnings and reaffirming aggressive infrastructure investment plans.

Price Action: Intel’s stock closed 10.84% higher on Tuesday at $100.86 and fell 3.18% in extended trading.

Benzinga edge rankings indicate INTC has a Momentum score in the 98th percentile and a negative price trend in the short term. Over the medium and long term, the stock has a positive price trend.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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