Steve Eisman warns AI boom depends on OpenAI and Anthropic stability

Investor Steve Eisman, known for his successful bet against the housing market before the 2008 financial crisis, has raised concerns about the artificial intelligence (AI) boom. During an appearance on CNBC's "Fast Money" on Tuesday, he indicated that the future of the booming sector may hinge on just two companies: OpenAI and Anthropic. According to Eisman, these startups account for approximately 70% of AI-related revenue generated by major tech companies like Microsoft, Amazon, Alphabet's Google, and Oracle. He warned that their success is critical for the financial stability of these giants.

Eisman's caution comes amid a growing scrutiny of whether the significant investments in AI will yield satisfactory returns. The spotlight on OpenAI and Anthropic highlights how concentrated the industry's revenue sources have become. Eisman pointed out that these two companies represent a large portion of the cloud revenue—between 25% to 35%—for the tech behemoths heavily invested in AI. This reliance creates a scenario where any setback for either OpenAI or Anthropic could jeopardize the broader AI ecosystem.

Adding to his concerns, Eisman noted the rising competitive threat from Chinese companies. He emphasized that Chinese open-source AI models are considerably cheaper and are starting to capture market share from their American counterparts. “If something bad happens to Anthropic and OpenAI,” he warned, “we could have a big price war.” This potential shift could disrupt the current market dynamics and raise questions about the sustainability of the AI boom.

Eisman's remarks resonate with an ongoing debate among investors regarding the viability of current AI investments. Fellow investor Michael Burry, who also gained fame for his predictions about the housing bubble, has expressed skepticism about the underlying demand for AI. Burry has voiced concerns that much of this demand may stem from circular financing arrangements rather than genuine end-user needs. He has backed his perspective by shorting stocks of key players in the AI space, including Nvidia, reflecting a growing caution in the investment community.