Steve Eisman turns more defensive on AI trade as market risk builds

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Eisman shifts AI strategy

Highlights

Eisman has reduced risk by shorting against the box across multiple positions due to rising concerns over AI sector fundamentals and regulatory tactics.
Anthropic's S-1 IPO filing omitted recent revenue figures, with Eisman expecting a notable deceleration and highlighting its revenue-to-equipment expense ratio drop from 2.08 to 1.7 quarter-over-quarter.
Alphabet shares declined after Q2 earnings revealed advertising weakness linked to increased AI-driven queries, as Google faces slower monetization in AI mode despite ongoing ad experiments.

Portfolio shift and concerns over AI economics

As reported by CNBC, Eisman said on Thursday that he has reduced risk in his portfolio by shorting against the box across many of his positions, while stopping short of taking a net short stance on the AI trade.

He argues that concern is building around frontier AI model developers, which he believes are using fear around their technologies to help create a regulatory moat against cheaper rivals while masking weakening fundamentals. He said some leading technology executives have issued similar warnings.

Eisman pointed to Anthropic's recently filed S-1 as a particular source of concern. He said the company left its latest revenue figures blank in its initial public offering filing, and he expects those numbers to show a significant deceleration from the prior quarter. He also cited what he described as a capital efficiency problem, saying the ratio of revenue to equipment expense fell to 1.7 in the third quarter from 2.08 in the second quarter, based on analysis he had received.

He added that parts of Anthropic's filing looked "extremely negative" because they did not include many metrics for the upcoming quarter that would give investors a clearer view of the company's financial position.

Broader market exposure and Google warning signs

Eisman said he remains reluctant to make a definitive bearish bet against AI because of how deeply the theme is embedded across equities and the wider economy. In his view, it is impossible for a downturn in the technology sector to remain siloed from the broader market.

He said recent results from Google have added to investor anxiety. Alphabet shares fell after the company reported earnings on Wednesday, with weakness in its core advertising business as AI queries replace traditional internet search across its products.

Google executives said they are testing ways to respond to that shift. Chief Business Officer Philipp Schindler said strong growth in AI mode queries is affecting performance because monetization in AI mode is lower, although advertising experiments are showing promising results.

In our earlier article on the AI-linked tech sell-off, we noted that shares across semiconductors, data-center suppliers and AI infrastructure plays fell sharply as investors reassessed whether projected AI revenues can justify massive spending. We also highlighted how higher oil prices and inflation concerns added pressure by raising the risk of tighter financial conditions and higher financing costs, amplifying market volatility beyond just technology stocks.

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