GM. This is Milk Road Stocks, where Jensen Huang is basically a deity and we're okay with that.
This edition is an important update on why some of your favorite AI infrastructure stocks have been weak over the past few weeks.
First, a quick detour to private markets.
On Sept 23, Milk Road's Martin sits down with Alumni Ventures to talk about blockchain and private markets. Save your free seat here.
WHY YOUR FAVORITE STOCKS ARE FALLING ๐ค
Something wasnโt adding up over the past few weeks:
- Nebius posted 841% revenue growth.
- Micron guided margins toward 80%.
- Bloom Energy was raising full-year guidance.
And yet, all the stocks kept bleeding.
When great businesses sell off for no obvious reason, it usually means the reason isn't fundamental. It means something broke in the plumbing.
In this case, what broke was Leopold Aschenbrennerโs portfolio blowing up.
Here's the full story.
Leopold Aschenbrenner built one of the most concentrated leveraged AI portfolios on Wall Street through his fund Situational Awareness.
As of June 30, the fund held $20.2B in U.S. equities. More than 55% of the entire book was concentrated in two memory names:
- SanDisk: 28%.
- Micron: 27.5%.
- Bloom Energy: 9.6%.
- TSMC: 6.4% plus $24M in calls.
- Nebius: 6.1%.
- CoreWeave: 3.7%.
The fund was running leverage as high as 4x. Meaning for every $1 of actual capital, the fund controlled $4 of stock.
When things go right, leverage accelerates gains. When things go wrong, it accelerates the collapse.
And things went wrong in July.
AI and semiconductor stocks sold off sharply. Under 4x leverage, the portfolio reportedly lost roughly 67% of its value in a single month falling from a peak near $45B down to around $10B.
The entire leveraged public equity portfolio was liquidated to Ken Griffin's Citadel in late July for a reported 40 to 50 cents on the dollar.
But here's where it gets interesting.
On August 11, Citadel disclosed it had already unloaded more than 80% of the distressed position through over 100 block trades.
To put that sequence plainly:
Citadel bought a distressed portfolio at 40-50 cents on the dollar โ Called the bottom publicly two weeks later โ Then sold most of it directly into the rebound it had just announced.
This story is the core reason why AI infrastructure stocks are getting crushed.
But hereโs our lead analystโs take:
The AI infrastructure buildout hasn't changed, the memory shortage hasn't changed and the neocloud economics still remains the same.
Every position we hold was built around a thesis that remains completely intact.
And that's why we're ending this edition with the same message:
Our analysts are buying the dip. Our analysts are staying long.
WANT TO SEE WHAT WEโRE BUYING? ๐ฅ
During this sell-off, things got tense inside the Milk Road PRO community.
Stocks were falling and sentiment got ugly.
And naturally, people wanted to know: Should I sell? Hold? Or buy more?
That's where our analysts stepped in.
They shared what they were doing with their own portfolios, which stocks they were watching and where they saw opportunities to buy the dip.
Instead of guessing what happens next, PRO members could follow the people doing the research every day.
Inside Milk Road PRO, you can see:
- What our analysts are buying.
- What they're selling.
- Which stocks they're watching.
- Where they're buying the dip.
- And why they're making each decision.
And right now, there's one important deadline.
In 2 days, on August 26, Milk Road PRO's price goes up.
After that, the current price is gone.
So if you've been thinking about joining, this is your last chance to lock in Milk Road PRO at today's price.
FREE SEMINAR ON BLOCKCHAIN & PRIVATE MARKETS
Is VC capital still flowing into crypto or has AI taken it all?
Where is venture capital actually deploying across crypto and fintech right now?
Join Sophia Zhao (Partner at Alumni Ventures) and Martin from Milk Road for a live fireside conversation covering:
- Where capital is moving across blockchain and fintech
- What the next generation of blockchain companies are actually building
- How accredited investors can get exposure to private markets
The best part? Itโs completely free to attend and takes just one hour.
