'Big Short' investor Steve Eisman is hedging AI bets as trade nears a 'tipping point'

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Steve Eisman said he has shorted against many positions but is not net short any, pointing to Anthropic's filing and Google results

TIMOTHY A. CLARY / Getty Images

Steve Eisman, the investor known for “The Big Short,” has cut risk in his own portfolio because he sees the artificial intelligence trade nearing a “tipping point,” he told CNBC’s “Squawk Box” on Thursday.

"I've gotten much more conservative in my own portfolio. We have shorted against the box a whole bunch of our positions, so that our risk is much, much, much lower. But I'm not, like, net short any," Eisman said.

Eisman said he is wary of taking a firm position against AI because the trade is so entangled with the wider market. He called it "impossible" for the technology sector to be siloed away from the equity market and the rest of the economy.

"So much of the market is on the other side, and it's still reading tea leaves. I think we're getting closer. I think the numbers from Google $GOOGL scared people," he said.

Alphabet stock fell about 10% in premarket trading Thursday after the Google parent reported third-quarter results on Wednesday. Philipp Schindler, Google’s chief business officer, said Wednesday that rapid expansion in AI Mode search volume affected results because those queries bring in less revenue. “Our ad experiments have shown promising results,” he said.

Eisman's main concern is the developers of frontier AI models, according to CNBC. He believes they are stoking public anxiety about their technology to erect a regulatory barrier against cheaper, leaner alternatives and to mask weakening fundamentals.

In its initial IPO filing, Anthropic did not fill in its most recent revenue numbers, according to CNBC. Eisman believes the figures will reveal that growth slowed sharply compared with the previous quarter. He also said revenue relative to equipment expense stood at 2.08 for the second quarter before dropping to 1.7 for the third, based on an analysis provided to him. He called portions of the S-1 "extremely negative" because it lacked metrics for the upcoming quarter.

Anthropic told prospective investors earlier this month that its third-quarter revenue reached $16.8 billion and that it was profitable on an adjusted basis. The company is expected to list its shares in November.

Eisman warned in August that large technology companies had staked their futures on OpenAI and Anthropic succeeding. He named cheaper Chinese open-source models as the biggest threat to that concentration, saying a price war could follow if those models take significant market share.

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