Jane Street was hit by a $15 billion loss in July following losses tied to its investment in AI-focused hedge fund Situational Awareness and positions in technology stocks, according to two people familiar with the matter and an internal note reviewed by Reuters.
Despite the sharp decline, the trading firm has generated more than $40 billion in trading revenue so far this year, one source said. That figure already exceeds the $39.6 billion Jane Street generated during the whole of 2025 and puts the privately held firm ahead of major banks and other market-making competitors in trading revenue.
The losses came during a difficult period for investors exposed to artificial intelligence-related stocks. Situational Awareness, run by Leopold Aschenbrenner, a former OpenAI researcher, was among the funds hit by the downturn. Jane Street is an investor in the hedge fund.
During July, Situational Awareness sold most of its stock portfolio in a rapid liquidation to billionaire Ken Griffin’s Citadel after the AI-driven market decline triggered margin calls. The fund had suffered a major decline in its portfolio, contributing to the losses recorded by Jane Street.
In a message sent to employees on Friday, Jane Street executives described July as a “bad month” for the company. They said the decline at Situational Awareness contributed to the firm’s weak performance.
According to the internal note, Jane Street’s investment in the hedge fund had become significant after strong gains during the first half of the year. The subsequent decline left the firm’s investment roughly flat for the year, although it remained profitable over the entire period that Jane Street had held the position.
The company also acknowledged that its usual protection against sharp market declines did not work effectively during the July selloff. Jane Street typically buys put options to limit losses during sudden market drops. However, executives said the decline in AI stocks occurred gradually across the month, reducing the effectiveness of those short-term hedges.
The firm’s losses were not limited to AI-related investments. Jane Street also suffered from long positions in non-AI stocks in Asia, many of which had performed strongly earlier in the year.
The company said that many of the trades that had delivered strong gains during the second quarter became sources of losses in July. Several major semiconductor and memory stocks declined by about 50% during the month, intensifying the damage to portfolios exposed to the technology sector.
The July setback marked a significant change for Jane Street. The company recorded its first month of negative trading revenue since 2016, according to the employee note. Its revenue had also fallen by roughly 25% from its peak at the end of June.
The losses have prompted Jane Street to reassess its approach to risk. The company said it had closed a substantial portion of the positions in areas where it experienced losses during July and reduced its exposure in several other trading strategies.
Jane Street said the recent losses had made it more selective about taking risks, despite the firm’s substantial increase in trading capital during the year. Executives said the company’s current positions were consistent with its present risk tolerance.
Founded in 2000, Jane Street has around 3,500 employees and operates as a major global market maker. It provides liquidity across a wide range of financial products, including equities, exchange-traded funds, bonds, options, commodities and currencies. The firm has direct access to more than 200 trading venues worldwide.
Unlike many financial firms, Jane Street has not taken outside capital. Its capital structure allows it to maintain large positions while providing liquidity, including during periods when markets move against those positions.
Over the past 25 years, the company has developed sophisticated pricing systems using extensive data and research, helping it establish a strong position in global market making.
However, the July turmoil demonstrated that even a major trading firm can be affected by broad market shifts. Jane Street said trading volumes remained strong and that it had continued improving its short-term trading strategies, which it described as more profitable than ever.
