Altimeter Capital Management’s hedge fund fell 11% in July, joining a growing list of investment firms that suffered double-digit losses as the sharp reversal in AI-related stocks rattled hedge fund portfolios, according to a report by Bloomberg.
The technology-focused manager, which invests across both public and private companies, was among the highest-profile casualties of July’s selloff after benefiting significantly from the AI-driven rally earlier in the year. Despite the setback, the fund remains up 34% year to date, reflecting the strength of its first-half performance.
Altimeter runs a relatively concentrated portfolio. At the end of the first quarter, its largest listed holdings included Taiwan Semiconductor Manufacturing Co and CoreWeave, both of which posted steep declines during July as investors reassessed AI infrastructure spending and reduced exposure to semiconductor-related names.
The market correction also weighed on a number of leading multi-strategy hedge funds.
Balyasny Asset Management declined 1.5% during the month, reducing its year-to-date return to 1.2%, while Verition Fund Management lost 1.1%, leaving it up 4.5% for the year. ExodusPoint Capital Management also finished the month lower, falling 0.9% to leave its 2026 gain at 3.5%.
Not every manager was caught by the downturn. Citadel was among the standout performers, with its flagship Wellington fund gaining 5.9% in July. The firm’s performance was supported in part by its acquisition of discounted AI-related positions from hedge fund Situational Awareness following that firm’s liquidity crisis.
July proved particularly painful for managers with concentrated exposure to artificial intelligence and semiconductor companies. The selloff intensified after investors questioned whether the pace of AI infrastructure investment could be sustained, triggering broad declines across technology stocks.
The pressure was compounded by the collapse of AI-focused hedge fund Situational Awareness, which reportedly lost 67% during the month before selling most of its public equity portfolio to Citadel to meet margin calls.
Several large multi-strategy firms also finished the month in negative territory. Millennium Management lost 2.1%, reducing its year-to-date return to 8.2%, while Point72 declined 3.3%, leaving it up 10.9% for the year.
Performance across the hedge fund industry was highly dispersed. Quantitative and systematic managers generally navigated the volatility more successfully, while funds with concentrated AI exposure recorded some of the year’s steepest drawdowns. Among the weakest performers were Point72’s AI-focused Turion strategy, which fell 11.4%, and Whale Rock’s flagship and long-only funds, which declined 21.7% and 18.8%, respectively.
The divergence follows an exceptionally strong first half for the industry, with hedge funds returning an average of 7.4% through June, according to PivotalPath. July’s sharp reversal underscores how quickly market leadership can shift when crowded thematic trades unwind, particularly in sectors that had delivered outsized gains earlier in the year.
