Jane Street, the New York-based quantitative trading firm, had built substantial exposure to AI-focused investments before markets turned against the sector.
The Financial Times reported that the firm's positioning left it more exposed than usual when AI names and related funds fell sharply.
The reversal came after a period of unusually large trading revenue in the first quarter, much of it tied to the same AI-linked bets that later worked against the firm.
Infrastructure bets add to risk
Earlier this year, Jane Street committed large sums to AI infrastructure, including a multibillion-dollar cloud computing deal and equity investments in compute providers, the companies that supply the processing power behind AI models.
The firm also held a material stake in an AI-focused hedge fund that had grown rapidly during the boom.
When AI stocks weakened, that fund faced forced sales and financial distress, a sequence that amplified losses for Jane Street and other counterparties exposed to the same positions.
Capital plans under review
Jane Street is now reviewing its financing and capital plans as it manages the drawdown, according to the report.
Options under consideration include raising money through bonds and private credit arrangements to cover an expanded compute and investment footprint built up during the AI boom.
Wider sector implications
The losses illustrate how concentrated AI positioning has become across trading firms and hedge funds, many of which layered infrastructure investments on top of direct equity bets.
The Financial Times' report suggests that the unwinding of those positions can spread quickly between funds and their counterparties once sentiment in the sector turns.
