The man who made $1 billion betting against the 2008 housing market says the current artificial intelligence boom is starting to look like a movie he’s “seen before”.
Steve Eisman, on whom Steve Carell’s character in The Big Short is based, is an American investor who recognised the flaws in the US housing market and successfully shorted it prior to the 2008 Global Financial Crisis.
Mr Eisman decided the housing bubble was about to burst, independently reaching the same conclusion as fellow investor Michael Burry (played by Christian Bale).
His fund profited to the tune of $US1 billion.
In the years since, Mr Burry has repeatedly warned that the AI boom is yet another unsustainable bubble.
While Mr Eisman isn’t using the “bubble” label, he too is now sounding the alarm, warning of structural risks hiding beneath the AI build-out.
In an appearance on the Prof G Markets podcast last week, the 64-year-old said he wasn’t buying the AI hype — in particular, recent warnings from Anthropic employees that the technology could kill all humans.
“There’s absolutely no evidence whatsoever that AI is anywhere close to AGI (artificial general intelligence),” Mr Eisman said.
“What AI is, is a next-word retrieval model. It doesn’t think, and there’s no evidence at all that it’s ever going to think… When someone says the world’s going to end, I just don’t take them seriously.”
Mr Eisman argued that the era of “token-maxxing” — where companies embraced AI to the point of burning obscene amounts of tokens — had finished as frontier labs like Anthropic began competing with cheaper open-source models.
“So if I was Anthropic and OpenAI, I’d be nervous,” he said.
“If I can manufacture a crisis, and then the regulators come in and I can manipulate them so that we don’t want the open-weight models, all of a sudden we’ve got a duopoly.”
Other critics, including Tesla CEO Elon Musk, have also questioned whether Anthropic exaggerates the dangers of AI in order to encourage regulation of competitors or drive investor interest.
Mr Eisman pointed to Anthropic’s expected initial public offering (IPO) in November, with a target valuation of $US2 trillion, and suggested the company could be rushing to go public before a growth slowdown.
Asked whether he feared an “AI bubble,” he said he was worried about “concentration risk… if you look at the hyperscalers, 70 per cent of their AI revenue is from OpenAI and Anthropic”.
“The whole chain basically flows to Anthropic and OpenAI… If there’s a problem with those two companies, then I think the whole chain is in trouble.”
He was also worried about tech companies with off-balance sheet debt, such as Meta, which is funding a $30 billion data centre in Louisiana with a private financing agreement.
“There’s something like $500 billion worth of AI debt being raised this year. How much of that is off-balance sheet, I don’t know yet; I don’t think it’s insignificant,” he said.
“I think the reason why they’re doing some of these off-balance sheet shenanigans is they’re trying to preserve their credit ratings as much as possible.
“So if you can get it off-balance sheet it’s like poof, magic, it doesn’t exist, and the ratings agencies won’t count it. I’ve seen this movie before. It usually doesn’t end well.”
“You’ve been in that movie before,” host Ed Elson pointed out.
“I’ve been in that movie. So I’m kind of appalled,” Mr Eisman replied.
In the wake of the 2008 financial crisis, Steve Eisman continued his career as a hedge fund manager and investor and became the subject of a best-selling book and major film.
He was put on indefinite leave from investment manager Neuberger Berman in late 2024 after a tweet in which he appeared to celebrate the destruction of Gaza.