Despite a turbulent stretch that forced the AI-focused hedge fund Situational Awareness to offload most of its public holdings, it has doubled down on a private bet. The fund just poured another $400 million into Source Foundry, a chip manufacturing startup founded by Stanford researchers, according to The Wall Street Journal. That injection pushes its total commitment to the company to $500 million. Main Developments The new investment brings Situational Awareness's total funding in Source Foundry to $500 million, underscoring the fund's continued appetite for high-risk, high-reward technology plays. Source Foundry aims to make chip production faster and cheaper, an area of growing strategic importance as AI demand strains existing manufacturing capacity. This deal arrives weeks after the fund sold the majority of its public portfolio to Ken Griffin's Citadel at the end of July. Assets under management reportedly dropped from $20 billion to $10 billion, yet the fund retained its stake in Anthropic, signaling a preference for private, AI-centric positions. Read also: Anthropic Makes Claude Code Auto Mode Default for Paid Plans Background Situational Awareness was founded in 2024 by Leopold Aschenbrenner, a former OpenAI researcher in his mid-twenties with no prior trading experience. Early returns were reportedly strong, but the fund has struggled recently as AI infrastructure stocks declined. Aschenbrenner's personal life has also been in the spotlight—he reportedly didn't let the setbacks interfere with his wedding. The fund's pivot toward private investments like Source Foundry suggests a strategic shift away from volatile public markets. Why It Matters The move signals that even embattled AI-focused investors see long-term value in chip manufacturing innovation. If Source Foundry succeeds, it could lower barriers for chip production, benefiting the broader AI ecosystem. For Situational Awareness, this bet may be crucial to rebuilding its reputation after a steep asset decline. What's Next Observers will watch whether Situational Awareness can stabilize its remaining portfolio and whether Source Foundry can deliver on its manufacturing promises. The fund's next moves—private or public—will likely hinge on AI infrastructure market recovery.