Steve Eisman, the investor famous for betting against subprime mortgages before the 2008 crisis, has sold his entire stake in Alphabet, Google's parent company. He told CNBC he is worried about artificial intelligence — specifically, that the technology could become a bubble and that Alphabet's heavy spending on AI may not pay off.
Why Eisman walked away
Eisman didn't just trim his position. He got out completely. In an interview, he said Alphabet is spending “a lot of money” on AI without a clear return. He compared the current AI frenzy to the early days of the internet, when companies poured cash into dot-com ventures that later collapsed. “I’m not saying AI is a bubble,” he said, “but I’m not willing to bet on it.”
His move stands out because Eisman is known for making big, contrarian bets. He was one of the few investors who saw the housing crash coming and profited from it, a story chronicled in the book and film “The Big Short.” Now he’s betting against the AI hype — at least when it comes to Alphabet.
What he’s buying instead
Eisman didn’t just go to cash. He said he’s putting money into other areas, including regional banks and infrastructure plays. He thinks those sectors are undervalued compared to tech giants. He also said he still owns some other tech names, but he wouldn’t say which ones.
His shift away from Alphabet is notable because the company is one of the biggest spenders on AI. Google has invested billions in its Gemini model, cloud AI services, and data centers. But Eisman argues that the payoff is uncertain and that competitors like Microsoft and OpenAI are moving faster.
Eisman’s skepticism isn’t new. He’s been warning about AI hype for months. In earlier interviews, he said the technology is real but overhyped, and that most companies won’t see the profits investors expect. He’s not alone — some analysts have questioned whether AI spending will generate enough revenue to justify the costs.
But Eisman’s sale of Alphabet is a concrete action, not just talk. It shows he’s willing to put his money where his mouth is. For now, he’s betting that the AI boom will cool, and that Alphabet’s stock will suffer as a result.
Whether other big investors follow his lead remains an open question. Alphabet’s stock has been volatile this year, and its next earnings report will give a clearer picture of how AI spending is affecting its bottom line.
