The AI trade, which spent much of the past two years making hedge fund managers look like geniuses, finally moved the other way. Balyasny Asset Management and Verition Fund Management both posted losses in July as a broad selloff in artificial intelligence stocks punished funds with exposure to the sector’s biggest winners.

Balyasny fell 1.5% during the month, reducing its year-to-date return to 1.2%. Verition declined 1.1% in July, leaving the firm up 4.5% for the first seven months of 2026.

The AI unwind hits harder than expected

The July selloff was driven by rising investor skepticism about the sustainability of capital expenditures from the so-called hyperscalers, the large technology companies investing billions of dollars in AI infrastructure. When a consensus trade loses momentum, the reversal can be sharp, and that matters for hedge funds because AI-linked names have been a major source of performance across the market. Chipmakers and AI infrastructure names absorbed much of the pressure.

Altimeter Capital Management fell 11% in July, a significantly steeper decline even though it remained up 34% year to date. Its losses were driven in part by two holdings in particular: Taiwan Semiconductor Manufacturing Co., which dropped 15% during the month, and CoreWeave, which fell 28%.

Balyasny had flagged AI risk, but not avoided it

Balyasny’s leadership had previously identified AI disruption as a potential major tail risk for 2026, a warning that now looks both prescient and painful. Recognizing a risk and fully hedging against it are very different matters.

Balyasny and Verition are multi-strategy hedge funds with dozens or even hundreds of portfolio management teams across equities, credit, macro, and quantitative strategies. Balyasny’s 1.5% decline suggests the AI selloff was broad enough to affect multiple teams at once, limiting the diversification benefit that is central to the platform model.

Both firms have built strong reputations in recent years. Balyasny, founded by Dmitry Balyasny, has grown into one of the largest multi-manager platforms in the industry. Verition, led by Nick Maounis, has also delivered steady performance that has attracted substantial capital.

What the moves show about concentrated AI exposure

Balyasny remains positive for the year, and Verition is still up 4.5%. Altimeter, despite its difficult month, is also holding onto a 34% year-to-date gain.

Altimeter’s 11% July decline, driven heavily by just two positions in TSMC and CoreWeave, highlights how quickly a concentrated AI bet can reverse when sentiment shifts, especially when a fund’s exposure is tied to a small number of highly sensitive names.