Chip Stocks Crash, $20B Fund Margin Called, Frontier Labs: SLOW DOWN AI, Mamdani's Grocery Stores
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What is the main topic discussed in this episode?
All right, everybody, welcome back. Welcome back to the number one podcast in the world. The core for fantastic for the original quartet is here. Did we peek at like, number two, or number three last week? Is that what happened? I think it was number four in the world. So yeah, I mean, usually we're number one in the world.
US trending.
US trending. We're usually number one globally, but yeah, and sometimes number four US. I forgot my Starlink, so let me apologize to everybody. That was a critical error when you're on the road or on the water, but you know, it'll be fine. I had five huge leads come in this week. The Glenn Gary, Glenn Ross leads?
Five big enterprise leads. Enterprise sales is a bear because it's super chunky, but the deals are ginormous.
Sax, you got any advice for Chamath from your enterprise sales days? You closed some of those big seven-figure deals when you were doing Yammer.
No leverage. Don't put on leverage. No leverage will be taken.
That's the name of the show today. Leverage equals risk of ruin.
PSA, no leverage. I have the situational awareness to not lever up. That's good. Yeah, you want that situational awareness.
I mean, it's kind of out there.
I mean, if you name your fund situational awareness, that's... Yeah, come on the pod anytime, Leopold. All right, everybody, we got to talk about chip stocks crashing after an all-time run-up and... We had a major hedge fund get margin called and some incredible margin calls happening in South Korea. Leopold Aschenbrenner is a 25-year-old hedge fund manager. He left OpenAI two years ago to start his own fund. And apparently, according to reports, this is breaking news on Thursday when we tape, he got margin called and had to sell his entire public portfolio to cover massive losses caused by his leverage. And who bought them? None other than Citadel's Ken Griffin. We don't know if it was Ken Griffin himself, but Citadel bought it according to the early reports.
Leopold had insane returns and he rode the wave of AI and chips and frontier labs as recently as this month. And he started the fund with but $225 million in 2024. He grew it 100X to 20 billion this year or so. Ran it all the way up to 45 billion. Now he's at 200X earlier this month by trading on leverage, according to our friends at CNBC. At the end of the June, he was reportedly up Forex, 450% this year. Some have reported that he's also selling his massive entropic stake to cover these losses, but the Wall Street Journal is disputing it. Again, we're happy to have him here on the program. How did this all blow up? Well, NASDAQ's chip index This is called the Philadelphia Semiconductor Index. It's down over 20% over the last month.
That's bear market territory, obviously. Definition of bear market territory, for those of you who don't play in the markets, is anything over 20%. The index included the top 30 U.S. listed chips. That's people like NVIDIA, TSMC, AMD, Micron. You know all those big names. The index bounced back a bit today, up 7% when we're taping. So we may have found a bottom. Unfortunately for Leopold, he had already sold. Samsung and SK Hynix, two South Korean chip companies that are not included in the NASDAQ index, also got smashed. crushed, demolished. Samsung down 38% over last month. SK Hynix down 14% since going public three weeks ago. The Kospi, that's South Korea's version of the S&P 500, is down over 40% in the last 40 days.
Between last Friday and Wednesday, leading chip companies shed over a trillion dollars in market cap combined. So to put this in context, chip stocks had a legendary run the past couple of years, but trading on leverage, and we'll talk about it. Very dangerous. If there is a downturn, we'll get into the South Korea wrinkle as well. Even with this downturn, the five-year results are still spectacular. Chamath Micron up 850%, mostly in the last year. NVIDIA up 875% in the last five years and Broadcom up 663%.
Let's discuss it. If I was going to give you one piece of advice when you're running risk is you have to manage leverage incredibly carefully because when it runs ahead of you, the unwind is incredibly violent and it's incredibly quick.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–4:30
2
What happened when chip stocks crashed and Leopold Aschenbrenner’s fund was margin called?
4:30–16:34
3
How does leverage amplify risk and cause rapid fund liquidations?
16:34–25:30
4
Could macro forces and China’s actions explain the chip downturn?
25:30–1:36:20
Speakers
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