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One of Wall Street’s Best Hedge Funds Just Blew a 44% Gain Because of AI Bets

At the tip of June, Lone Pine Capital’s flagship hedge fund was up 44% for the yr. Three months later, virtually all of it was gone after its bets on AI shares turned.

The fund, known as Cypress, completed September up simply 0.6%, Bloomberg reported. Lone Pine manages about $19 billion. It had posted double-digit good points three years in a row.

The AI Bubble Is Affecting Biggest Wall Street Traders

Lone Pine Capital is traditionally thought-about one of Wall Street’s most profitable and distinguished hedge funds. However, its latest efficiency has skilled sharp ups and downs.

July did most of the harm. Cypress misplaced practically 25% that month as AI and tech shares offered off. Tensions involving Iran and a spike in oil prices made the rout worse.

The timing was brutal. Lone Pine purchased 5 of its seven greatest US inventory positions within the second quarter, in line with figures cited by Hedgeweek. Together, they made up about 40% of its US portfolio.

The greatest was Nebius Group, a Dutch firm that rents out AI computing energy. Lone Pine held about $1.18 billion of it. The inventory fell practically a third in July.

Q3 share-price falls for Applied Materials, Nebius Group and Seagate, prime Lone Pine hedge fund holdings

Applied Materials, which makes chipmaking machines, dropped 29%. ASML, AppLovin, Corning, and Home Depot additionally fell.

Cypress additionally bets on some shares falling, a tactic known as quick promoting. Those bets misplaced cash too.

Lone Pine hedge fund year-to-date returns, finish of June vs. finish of September 2026

“Lone Pine gave all of it again after being up 44% via the primary half of the yr. Gotta be actual powerful to clarify this to the LPs,” inventory dealer Negligible Capital remarked.

Big Investors Are Split on the AI Trade

Lone Pine will not be the one huge title burned by AI. In July, AI bets practically sank former OpenAI researcher Leopold Aschenbrenner’s hedge fund. He has since purchased again into AI shares.

Michael Burry, the investor made well-known by “The Big Short,” is betting the opposite method. He holds put options on Nebius, contracts that repay if the inventory falls.

He defined the shift in a September 28 put up.

“Fundamentally, I’m shifting timelines up,” Burry noted.

Lone Pine’s greatest AI guess is now one of Burry’s targets.

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