The AI Trade's Paper Tiger: SanDisk's Supercycle and the Limits of Leverage The recent turmoil in Situational Awareness, one of the market's most aggressive AI investors, highlights the risks of relying on leverage to amplify returns in a highly volatile trade like AI.
The hedge fund's dramatic increase in exposure to SanDisk (SNDK) before its near collapse during July's selloff in AI related stocks is a cautionary tale about the limits of leveraging returns on the promise of artificial intelligence.
SanDisk, as one of the biggest beneficiaries of the memory boom, has indeed been at the forefront of the AI trade.