Market Concentration in AI Sets Up Potential Correction: Steve Eisman

Big Short investor Steve Eisman says the entire market has become one trade - AI. He recently sold his long-held position in Alphabet (Google) near its record high, cutting his exposure to artificial intelligence. Speaking on CNBC's Squawk Box, Eisman explained that he cannot even recall how long he had owned Google, but felt it was time to reduce his AI exposure.

The timing of the sale looks good so far, with Alphabet dropping roughly 20% in about two months after peaking at $408.61 on May 18. Eisman did not rotate into safer stocks like Clorox, stating that people either want to buy AI or don't want to buy anything else.

Eisman is concerned about the concentration of investments in AI-related companies and bonds. He claims that even those who think they are diversified have more than 50% exposure to tech and AI-related assets, citing a standard portfolio breakdown where 46.5% of the S&P 500's constituents are Information Technology or Communication Services.

The Bank of England reported that five AI hyperscalers held just 3% of outstanding US investment-grade debt at the end of 2025, yet accounted for over 15% of this year's issuance by early May. Eisman believes a correction is possible if AI fails commercially, but he does not expect it to happen within the next two weeks.

Central banks have also flagged concerns about fixed income being 'one obvious vulnerability' if hyperscalers slow capital spending. The link between tech and crypto has been noted, with Bitcoin (BTC) down about 45% over the past year. Eisman expects AI to succeed as a technology, but acknowledges that the trade built around it could still unwind.