Steve Eisman, the investor made famous by The Big Short, said he has reduced his exposure to artificial intelligence after selling his longtime stake in Alphabet , warning that investors may be underestimating the risks if the AI boom fails to deliver on lofty expectations. “I’ve lightened up. I sold my Google a couple of months ago. I’ve owned Google. I can’t even tell you how long I’ve owned Google,” Eisman said Monday on CNBC’s ” Squawk Box .” “I wanted to reduce my exposure to AI.” His comments came after the relentless rally in technology stocks took a breather. The S & P 500 and the Nasdaq Composite just suffered back-to-back weekly losses, falling 0.6% and 2.1%, respectively. Last week, Alphabet, the owner of Google and YouTube, fell nearly 8% after raising its capital spending forecast , underscoring the massive investment required to build AI infrastructure. Eisman said he hasn’t redeployed the proceeds into defensive sectors, arguing that investors remain singularly focused on AI rather than consumer staples or other, traditionally safer corners of the market. “People either want to buy AI or they don’t want to buy AI,” he said. “They don’t want to shift out of it to buy Clorox.” When asked what happened if AI doesn’t succeed, Eisman said “I think we have a big correction.” Eisman said he is not betting against the broader market, but worries that investors have become overly concentrated in a single theme. “It’s all one trade,” he said. “Even people who think they’re diversified, because they own 60% stocks and 40% bonds, are missing the fact that they’re actually not diversified, because of their 60%, more than 50%, is of it is tech and AI related, and of the 40% of the bonds, most of the new issuance of bonds is AI related … What’s scares me is that it’s all one trade.” The investor said he is sitting on a lot of cash until he figures out what to do.
