Jane Street suffered a roughly $15bn setback in July as the sharp reversal in artificial intelligence stocks hit the trading firm’s exposure to hedge fund Situational Awareness and other technology positions, according to a report by Reuters.
The report cites unnamed people familiar with the matter and an internal note to employees as revealing that the loss marked a dramatic reversal for one of Wall Street’s most successful trading firms. Despite the July drawdown, Jane Street has generated more than $40bn in trading revenue so far this year, according to one source, already exceeding the $39.6bn it generated during the whole of 2025.
The firm said in its employee note that July had been a difficult month, with the drawdown at Situational Awareness contributing to the poor performance.
Situational Awareness, founded by former OpenAI researcher Leopold Aschenbrenner, had been a strong performer during the first half of the year and Jane Street held an investment in the fund. But a sharp decline in AI-related stocks triggered margin pressure at Situational Awareness, forcing it to sell most of its public-equity portfolio in a distressed transaction with Citadel, founded by Ken Griffin.
Jane Street said the investment had grown significantly after Situational Awareness performed strongly earlier in the year. Although the subsequent losses left Jane Street’s stake roughly flat for the year, the firm remained ahead over the full period of its investment.
Jane Street said it typically uses put options to hedge against sharp market declines. However, the firm’s protection proved less effective because the losses in AI stocks developed gradually over the course of July rather than occurring in a single abrupt market shock.
The trading firm also suffered losses on long positions in Asian equities outside the AI sector. Many of those holdings had been among its strongest-performing trades during the second quarter.
Several major semiconductor and memory stocks fell by around 50% during July, according to Jane Street, producing losses across a portfolio that had benefited substantially from the same trades in the preceding months.
The firm’s July performance represented its first negative month of trading revenue since 2016. Jane Street said revenue was approximately 25% below its late-June peak following the drawdown.
The scale of the losses has prompted Jane Street to reduce risk in some of the areas that generated the largest losses.
The firm said it had closed a substantial portion of its exposure to the specific strategies responsible for July’s losses and had also reduced risk-taking elsewhere.
