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Eisman Warns AI Boom Built on Shaky Ground
11 Dec
Summary
- AI models may see diminishing performance gains as they scale.
- This challenges the core assumption of increasing chip demand.
- Eisman compares the risk to the flawed mortgage market before 2008.
Steve Eisman, a prominent figure from "The Big Short," is raising concerns about the sustainability of the artificial intelligence boom. He theorizes that the performance gains from increasingly large language models may start to diminish as they scale. This challenges a core assumption in the market, which posits that greater model complexity will continue to drive significant demand for computing power and chips.
Eisman articulated his worries on CNBC, explaining that the rate of improvement in these models might slow down, potentially impacting companies heavily invested in chip manufacturing. He cautioned against panic but emphasized the foundational nature of this potential risk. He drew a parallel to the period before the 2008 financial crisis, where the entire mortgage market rested on the flawed assumption that housing prices would not fall.
Despite his concerns, Eisman is currently holding onto his investments in key AI players like Nvidia, Microsoft, and Meta Platforms. This perspective echoes warnings from Michael Burry, another "Big Short" alumnus, who has also expressed skepticism about overstated AI demand and is reportedly betting against the AI sector.
