Eisman cuts AI risk before bet

Steve Eisman, the investor who predicted the 2008 housing crisis, has reduced his exposure to artificial intelligence stocks. In an interview with CNBC’s Squawk Box on Thursday, he stated he has become much more conservative with his portfolio. He said his team shorted against the box a large number of positions to lower risk. However, he confirmed he is not yet net short the sector.

Eisman’s caution focuses on frontier algorithm models. He argues these companies are using current market fear to build competitive regulatory barriers against cheaper products. This strategy, he believes, hides weakening financial fundamentals. He pointed to Anthropic’s initial IPO filing as evidence. The company left its latest revenue figures blank in that document. Eisman expects the missing numbers to show a sharp deceleration from the prior quarter. He noted that other metrics in the report indicate capital efficiency issues.

An analysis Eisman cited shows the ratio of revenue to equipment expense dropped from 2.08 in the second quarter to 1.7 in the third quarter. He described this shift in trajectory as a major change. Despite these signs, he said he fears making a definitive bet against the AI trade. The technology sector is deeply intertwined with the rest of the economy. He called it impossible to isolate the tech sector from the broader equity market.

Eisman noted that the market is currently reading tea leaves. He believes the sector is getting closer to a tipping point. He specifically mentioned that recent numbers from Google frightened investors. Alphabet’s stock fell sharply after the company reported earnings on Wednesday. The drop followed a major pullback in its core advertising business. This decline occurred as AI queries replaced traditional internet search across its products.

Google executives said Wednesday they are running experiments to address the issue. Philipp Schindler, Google’s chief business officer, addressed the revenue impact. He said, 'It's worth noting the strong growth in AI mode queries had an impact because of the lower monetization we are seeing in AI mode.' He added, 'Our ad experiments have shown promising results.'

Eisman’s view on Anthropic remains critical. He described portions of the company’s recently filed S-1 as extremely negative. He noted the document lacked many metrics for the upcoming quarter. He argued this omission prevents a clear picture of the company’s financial situation.