Reserve 🌐 (@reserveprotocol): Al Supercycle Weekly — Aug 5, 2026

Al Supercycle Weekly — Aug 5, 2026 Turns out it wasn’t just Korean retail investors who got margin called last week. The forced unwinding of Situational Awareness’s public equities book was probably the most consequential development of the week, and a reminder of Charlie Munger’s old line: “Smart men go broke three ways — liquor, ladies and leverage.” It’s kinda hard to overstate how prescient and successful Situational Awareness had been up to this point. What started as a modest $225m vehicle in 2024 with a singular focus on AI was, at its peak, a $45bn behemoth boasting YTD returns of 270% after a blistering 2025... an incredible outcome by any measure. Based on what we know now, the firm didn’t just hit it out of the park picking the biggest beneficiaries of AI and the agentic revolution; it was augmenting those returns with as much as 4x leverage. Some may find the Bill Hwang comparisons distasteful, but this was very much the strategy Archegos employed to great success before its implosion evaporated what had at one point been a $50bn fortune. SA ran the same playbook with a far better basket of stocks... and exposed itself to the same set of technical risks. Leverage has always been a Faustian bargain. Situational Awareness was overwhelmingly right on its positions. It simply entered a stretch where being right mattered far less than being able to manage its balance sheet and keep lenders at bay. Once the market worked out what was happening, things could only get worse: major players frontran the fund’s capitulation, sparking a vicious cycle that ultimately forced SA to sell much of its remaining public book to Citadel to stabilize the fund. So where do we go from here? The market escaped what could have been a far worse unwind, and it now sits better positioned for a recovery both fundamentally and technically. Most of the leveraged AI exposure across retail and institutions has been unwound, while the fundamental drivers of AI remain intact, if not stronger. Situational Awareness is still in business, but with reduced AUM and a pledge to avoid leverage, it won’t have the same outsized impact on markets. For the first time in a while, investors can look forward and restart the fundamentally consequential exercise of pricing for the future. The week ahead Wed 8/5: SanDisk earnings (4:30pm ET). The cleanest read on whether memory pricing power is still climbing. Guidance was $7.75–8.25B on higher prices and higher volume. Same day, Fed Governor Lisa Cook speaks on the economic outlook (4:05pm ET) — worth a listen with three of her colleagues already voting to hike. Wed 8/5: @FlashMem Summit, Santa Clara (through Aug 6). Where SK hynix and SanDisk's new High Bandwidth Flash standard — flash packaged right next to the processor — gets its public airing. Thu 8/6: Applied Optoelectronics earnings (after close). The purest test of whether the laser shortage shows up as fatter margins or just higher input costs. Fri 8/7: July jobs report (8:30am ET). The week's main event. Forecasts cluster around 90–120k jobs and unemployment ticking up to 4.3%. Futures are pricing roughly a 64% chance of a September hike, so a hot number feeds that case and a soft one takes the pressure off. Tue 8/11: Lumentum and CoreWeave earnings. Lasers and rented AI computing power, same evening. Wed 8/12: July inflation report (8:30am ET), plus Coherent and Nebius earnings. Inflation first, then two more reads on optics and AI cloud demand. On the horizon: wholesale inflation and SanDisk's investor day Aug 13; Fed meeting minutes Aug 19; and NVIDIA's earnings Aug 26 — still the single print that resets the whole sector. The AI Supercycle Weekly is published by Reserve for informational and educational purposes only. Nothing here is investment, legal, or tax advice, or an offer or solicitation to buy or sell any asset. Views are the author’s as of the publication date; they're opinions, not predictions, and may change without notice. Figures come from public market data and third-party sources we believe reliable but don’t guarantee. Reserve builds and operates a platform for onchain index funds (DTFs), including AI-themed baskets, and benefits from interest in this sector — a conflict of interest worth knowing when you read our market commentary. Crypto assets and DTFs are volatile, can be illiquid, and may lose value entirely; DTFs are not ETFs, are not registered with the SEC or CFTC, are not FDIC- or SIPC-insured, and are unavailable in some jurisdictions, including to US persons. Do your own research and consult a professional adviser before acting on anything here. Full terms: reserve.org/terms_and_conditions.