This paper proposes a novel measure of the reliance on generative AI of investment companies and utilizes it to study the adoption and implications of generative AI tools in the asset management industry, particularly hedge fund companies. We document a sharp increase in the use of generative AI by hedge fund companies after ChatGPT was introduced in 2022. In a difference-in-differences test, we find that hedge fund companies adopting generative AI produce superior raw and risk-adjusted returns relative to nonadopters, with a gain of 3 to 5% in annualized abnormal returns. We further identify this effect by exploiting ChatGPT outages as exogenous shocks. The outperformance originates from investment in AI talent, and more from firm policy and performance information than from macroeconomic information. Unlike hedge funds, non-hedge fund companies do not produce significant returns from their adoption. Large and more active hedge fund companies adopt the technology early and achieve higher returns than others, indicating that utilizing generative AI effectively as an investment tool may require a combination of other resources, such as data and expertise. Overall, our findings suggest that generative AI may exacerbate existing disparities among investors rather than mitigate them, further widening the gap between market participants.