Scale & Strategy
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- Sam Altman scrambles to patch GPT-5 after messy launch
- Billions Flow to New Hedge Funds Focused on AI-Related Bets
Sam Altman scrambles to patch GPT-5 after messy launch
The short version: OpenAI’s GPT-5 rollout was supposed to be a flex. Instead, it turned into a Reddit therapy session. Altman and team jumped into an emergency AMA Friday to explain why the model shipped with bugs, chart “crimes,” and the abrupt execution of older models like GPT-4o.
What actually happened:
- The livestream included a now-infamous “mega chart screwup” and rate limits so low Plus users felt throttled.
- The new autoswitcher — designed to route queries to the right model — crashed on day one, making GPT-5 look dumber than it is.
- Reddit threads piled up with calls to bring back GPT-4o, with users mourning its better personality and emotional IQ.
The damage control:
- Doubling Plus user rate limits.
- More transparency + customization in future updates.
- GPT-4o returning for paid users while they keep tinkering with GPT-5.
Why it matters: GPT-5 might crush benchmarks, but that’s not what most power users care about. For them, this felt less like the future of AI and more like the villagers showing up at Dr. Frankenstein’s castle with torches.
Billions Flow to New Hedge Funds Focused on AI-Related Bets
How a 23-year-old former OpenAI researcher amassed over $1.5 billion for a “brain trust on AI”
Leopold Aschenbrenner, 23, went from AI manifesto author to hedge fund wunderkind almost overnight. His San Francisco-based firm, Situational Awareness, is now managing over $1.5 billion — a haul most seasoned portfolio managers only dream of.
The story starts last year when Aschenbrenner, fresh off publishing a widely read 165-page essay about artificial superintelligence, decided to try his hand at stock picking. No formal investing background, no decades of experience, just a killer vision and a knack for AI.
As valuations of Nvidia, OpenAI, and other AI juggernauts keep climbing, money is flooding into hedge funds banking on the AI boom. Situational Awareness positions itself as a “brain trust on AI,” targeting global stocks primed to benefit from AI tech — semiconductors, infrastructure, power suppliers — plus bets on startups like Anthropic. On the flip side, Aschenbrenner uses smaller shorts on industries that might get steamrolled by AI’s rise.
Performance? Situational Awareness reportedly returned 47% after fees in the first half of 2024. For context, the S&P 500 managed about 6%, and tech hedge funds averaged 7%.
Aschenbrenner’s backstory is as interesting as his fund. A German native, he briefly worked at OpenAI before parting ways. The name “Situational Awareness” comes from that deep-dive essay he wrote on AI’s risks and promise. He also brought on Carl Shulman, a fellow AI intellectual who used to work at Peter Thiel’s macro hedge fund, as research director.
Backing the fund are heavy hitters like Stripe founders Patrick and John Collison, Meta AI figures Daniel Gross and Nat Friedman, and Graham Duncan — a respected investor and organizer of the Sohn Investment Conference.
Leopold’s confidence is notable: “We’re going to have way more situational awareness than any of the people who manage money in New York,” he told podcaster Dwarkesh Patel last year. Investors must believe him too — many have locked up funds for multi-year terms.
Meanwhile, the AI hedge fund scene is heating up everywhere. Princeton-based Value Aligned Research Advisors (VAR), started by ex-quants Ben Hoskin and David Field, launched an AI hedge fund in March and has pulled in roughly $1 billion. VAR manages another $2 billion in AI-related strategies, with backing from the philanthropic foundation of Facebook co-founder Dustin Moskovitz.
Veteran hedge-fund players are also diving in. Steve Cohen’s Point72 launched Turion, named after Alan Turing, with an initial $150 million from Cohen himself. The fund now tops $2 billion and has posted around an 11% gain so far this year.
This rush to ride thematic waves isn’t new. Clean energy and ESG funds exploded in response to demand years ago — but hype doesn’t guarantee success. Many ESG hedge funds shrank or shuttered when investor enthusiasm cooled.
AI valuations have proven fragile too. The market took a hit after Chinese firm DeepSeek dropped an advanced low-cost language model in January — though the sector bounced back fast.
Long-term AI believers argue the development and adoption trends are unstoppable, even if the road is bumpy.
With relatively few public companies fully in the AI game, funds pile into overlapping bets. Both Situational Awareness and VAR had Vistra, a power company fueling AI data centers, in their top-three U.S. holdings as of March 31.
Other hedge funds are targeting private AI startups. Gavin Baker’s Atreides Management teamed with Valor Equity Partners to launch a VC fund earlier this year, backed by Oman’s sovereign wealth fund, among others. Both have separately invested in Elon Musk’s xAI.
On the comeback front, Sean Ma is gearing up with a new AI-focused hedge fund after winding down his previous firm, Snow Lake Capital, which settled SEC charges last year. Ma took over M37 Management in Menlo Park and is currently fundraising for his AI hardware and software-focused fund.
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