Balyasny and Verition report losses as AI stock selloff rattles hedge fund giants

The AI trade, which spent the better part of two years making hedge fund managers look like geniuses, finally bit back. 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 high-flyers.

Balyasny dropped 1.5% for the month, dragging its year-to-date return down to a modest 1.2%. Verition fared slightly better with a 1.1% decline, leaving it up 4.5% through the first seven months of 2026.

The AI unwind hits harder than expected

The July selloff was triggered by growing investor skepticism around the sustainability of capital expenditures from the so-called hyperscalers, the massive tech companies pouring billions into AI infrastructure. When doubt creeps into a consensus trade, the results can be ugly. Chipmakers and AI infrastructure plays bore the brunt of the rotation.

Altimeter Capital Management fell 11% in July, a far steeper drop despite maintaining an impressive 34% gain for the year. The damage came from holdings like Taiwan Semiconductor Manufacturing Co., which slid 15% during the month, and CoreWeave, which cratered 28%.

Balyasny saw this coming, sort of

In a twist that’s equal parts prescient and painful, Balyasny’s leadership had previously flagged AI disruption as a potential major tail risk for 2026. Identifying a risk and fully hedging against it are, of course, two very different things.

Multi-strategy hedge funds like Balyasny and Verition operate dozens or even hundreds of portfolio management teams across equities, credit, macro, and quantitative strategies. A 1.5% drawdown suggests the AI selloff was broad enough to hit multiple teams simultaneously, overwhelming the diversification benefit that is supposed to be the whole point of the platform structure.

Both firms have built formidable 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 quietly delivered consistent performance that has attracted significant capital.

What this means for investors watching the AI trade

Balyasny is still positive on the year. Verition is up a solid 4.5%. Even Altimeter, despite its rough month, is sitting on a 34% year-to-date gain. Altimeter’s 11% decline, driven heavily by just two positions in TSMC and CoreWeave, illustrates how quickly a concentrated AI bet can unravel.

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