Eisman on CNBC
A few days ago, hedge fund manager Steve Eisman gave an ust a few minutes, he summed up the current market better than most. Eisman became famous for betting against the U.S. housing market before the 2008 financial crisis (not to be confused with Michael Burry from The Big Short). Unlike many commentators, he’s neither a permabull nor a permabear, he adjusts his views to the market, much like Warren Buffett. Right now, he’s cautious, and I find his reasoning compelling.
The market is riding on AI
Eisman argues that AI spending by hyperscalers like Microsoft, Amazon, Alphabet, and Meta has become the market’s main driver.
The biggest risk: AI spending slows
His key warning: if even one major hyperscaler meaningfully cuts AI capex, the market could “go straight down.” In his view, today’s market is essentially “one trade.” Many investors believe they’re diversified, but their portfolios are still heavily tied to AI, even traditional 60/40 allocations.
That’s also why he sold his long-held Alphabet position. Not because Google is a bad business, but because he wanted to reduce AI exposure.
He’s not bearish on AI
Eisman still believes AI will be economically transformative. His concern is that expectations have become extremely high, and at some point those massive investments must prove they can generate attractive returns. If they don’t, he expects a meaningful correction. Until then, as long as Big Tech keeps spending billions, the AI story remains intact.
My takeaway
Two points stood out to me.
First, today’s market is overwhelmingly driven by AI and tech, making those areas increasingly expensive. Whether it’s chips, energy, data centers, or infrastructure, everything ultimately comes back to AI. Companies with strong AI exposure, NVIDIA, Micron, Alphabet, ASML, JPMorgan continue to outperform, while much of the rest of the market lags.
That’s why I keep thinking about Buffett’s famous quote: “Be fearful when others are greedy.” To me, this is a time to become more selective, avoid FOMO buying, and perhaps take some profits in tech.
Second, Eisman highlights how few attractive alternatives exist today. Consumer staples struggle with weak growth, banks are increasingly tied to AI, automakers face headwinds, and chemicals remain cyclical. So where does capital go?
From my perspective, only two assets still look relatively inexpensive: Gold and Bitcoin. I’ve been adding to both. If the AI trade eventually fades, I could see part of that capital rotating into these two assets.
What’s your view on the AI theme, and how are you positioning your portfolio?
Footnote: If you were wondering about Eisman’s Clorox reference: it’s a U.S. maker of cleaning and disinfecting products—and a classic value trap, with virtually no returns over the past decade.
