{"id":2355,"date":"2026-06-27T08:12:29","date_gmt":"2026-06-27T08:12:29","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=2355"},"modified":"2026-06-27T08:12:29","modified_gmt":"2026-06-27T08:12:29","slug":"big-short-legend-steve-eisman-says-everyone-is-buying-the-wrong-ai-stocks","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=2355","title":{"rendered":"Big Short legend Steve Eisman says everyone is buying the wrong AI stocks"},"content":{"rendered":"
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If you\u2019ll recall, Eisman identified that a housing bubble was building in 2006 and 2007, fueled by an explosion in the issuance of \u201cteaser-rate,\u201d sub-prime mortgages, and that a crash was imminent. He famously seized the moment by shorting the home-loan market big time, a move that greatly profited both the trader and his firm FrontPoint Partners, a subsidiary of Morgan Stanley. Michael Lewis made Eisman a Wall Street legend by chronicling his exploits in his 2010 bestseller The Big Short<\/em>. In the 2015 film version, Steve Carrell played the famously cranky, contrarian (re-named \u201cMark Baum\u201d), while Marisa Tomei portrayed his wife and co-skeptic, former J.P. Morgan analyst Valerie Feigen (\u201cCynthia Baum\u201d). Today, Eisman hosts the weekly podcast \u201cThe Real Eisman Playbook,\u201d a program I highly recommend as much for its rollicking mockery of the group think that dominates the sell-side stock community as its sharp insights on economic trends and knack at nailing the basics that over time, drive outstanding returns to investors.<\/p>\n

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In a half-hour phone call, Eisman skewered the latest case where he reckons that hype and hysteria are fogging minds\u2014and it\u2019s hardly surprising that his new target\u2019s none other than the SpaceX phenomenon. \u201cSpaceX has the revenues of Kellogg\u2019s, which makes Froot Loops, which I love, but no one is going out of their way to buy Froot Loops,\u201d he declares. (The Ferrero Group of Italy bought Kellogg\u2019s cereal business; Ferrero\u2019s 2025 revenues of $21 billion are indeed close to SpaceX\u2019s $19 billion.) \u201cSpaceX stock\u2019s being valued at over 100 times revenue, whereas no company of any size has ever had that kind of valuation. By comparison, Palantir is at 50x.\u201d Eisman relates that Elon Musk plans to make money from ventures that only exit in the fictional world. \u201cI grew up reading a lot of sci-fi, a ton of it, I\u2019ve read it all,\u201d says Eisman. \u201cMusk and Silicon Valley grew up on it, too. The difference is, Musk and the SpaceX crew take it seriously!\u201d<\/p>\n

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Eisman notes that a particular source of riches SpaceX hopes to pluck from the planets especially caught his attention, since it\u2019s central to the plot of a sci-fi streamer he loves. \u201cIn the SpaceX S-1, where they talk about things SpaceX will eventually do, one of them is asteroid mining. Literally, there is really a great, wonderful sci-fi show on Apple TV called \u2018For All Mankind,\u2019 and asteroid mining plays an important part on the show. (Indeed page 71 of the SpaceX S-1 contains the following: \u201cWe plan to pursue asteroid mining operations to extract metals and other critical resources from near-Earth and main-belt asteroids, providing abundant raw materials for space-based industries.\u201d)<\/p>\n

It also puzzles Eisman that Musk is building an enterprise that straddles at least two industries, and may well add another, when the corporate world\u2019s moving in the opposite direction. \u201cWhy make the company into a massive conglomerate, when conglomerates are totally out of favor? The world is de-conglomerate-izing. People want pure play, and they\u2019re in rockets, Starlink and AI.\u201d The prospect that SpaceX will buy Tesla, Musk\u2019s second largest holding, is especially appalling to Eisman. \u201cTesla\u2019s been a horrible failure for the past several years,\u201d he avows. \u201cEvery year Musk says we\u2019ll have self-driving cars and robotaxis, which he doesn\u2019t do, and all we know is that earnings go down year after year. Musk is a cult, so people keep saying \u2018wait till next year.’\u201d <\/p>\n

Eisman holds a dim view of the hyper-scalers\u2019 future in AI<\/h2>\n

Eisman points to a part of the S-1 that\u2019s effectively a manifesto wagering SpaceX\u2019s future on AI. In fact, its chief AI product sports a brand name that Eisman fondly recalls from his teenage sci-fi enchantment. \u201cRobert Heinlein invented the word \u2018grok\u2019 in his novel \u2018Stranger in a Strange Land\u2019 [1961] about a Martian who comes earth,\u201d says Eisman. \u201cIn the book, \u2018grok\u2019 means \u2018deep understanding.’\u201d In contrast to its lofty moniker, Grok the product\u2019s a lightweight, claims Eisman. \u201cThe S-1 says that SpaceX total addressable market is $28.5 trillion, and the irony is that over 90% of that TAM is AI, which is all about Grok,\u201d he intones. \u201cGrok is a third-tier product. I\u2019ve heard reports that even the engineers in Musk\u2019s own space division won\u2019t use it because it sucks.\u201d<\/p>\n

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Overall, he says, the outlook for the hyperscalers is darkening fast. \u201cWe\u2019ve seen a sea change in their AI story, and not for the better,\u201d he declares. \u201cThat\u2019s because of two vectors. The first is that for the hyperscalers, AI is becoming increasingly capital intensive. Last year, Alphabet spent $80 billion on AI and funded it from cash flow. This year, it will spend $180 to $190 billion and raised $85 billion in stock. Now, they all have to raise funding through stock offerings because the table stakes get bigger and bigger.\u201d He adds that post-IPO, SpaceX will need to keep tapping the capital markets since its recurring cash flow doesn\u2019t come close to meeting its hunger for AI-driven capex.<\/p>\n

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\u201cThe other vector is that there are no \u2018moats\u2019 in AI,\u201d he contends. \u201cSomeone moves to ChatGPT then to Gemini then to Claude. Even if AI is the greatest thing since the invention of the printing press, there are no moats to shield the providers. You don\u2019t want to be the hyperscalers selling this highly competitive product where you have to cut prices to win customers. You want to be the suppliers selling them the picks and shovels, the chips and networking gear the hyper-scalers buy to make their products. Those products are highly customized and protected.\u201d For Eisman, it\u2019s far better to be a Nvidia, Arista or Cisco riding the capex boom than a Meta, Oracle, Microsoft or Alphabet battling a field of fellow behemoths in the brutal arena where the enterprise and retail solutions are easily swappable.<\/p>\n

Eisman stresses that he\u2019s not advising anyone to short SpaceX. \u201cI have no opinion on what will happen to SpaceX,\u201d he says. \u201cFrom a fundamental perspective, it\u2019s ridiculous But a lot of things can be ridiculous for a long time.\u201d For this dourest of doubters, Musk\u2019s claims for the feats ahead can only happen in the SpaceX founder\u2019s head, or in the sci-fi fantasies Eisman grew up on.<\/p>\n

Read more Apple blames inflationary effect of AI for price hikes: \u2018We have never seen a component price increase this much\u2019<\/a><\/p>\n

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Eisman famously called the housing bubble. Now he sees investors miscalculating the AI trade. <\/p>\n","protected":false},"author":1,"featured_media":2354,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[77],"tags":[],"class_list":["post-2355","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"yoast_head":"\nBig Short legend Steve Eisman says everyone is buying the wrong AI stocks - Cross Country Moving Team<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/crosscountrymovingteams.com\/?p=2355\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Big Short legend Steve Eisman says everyone is buying the wrong AI stocks - Cross Country Moving Team\" \/>\n<meta property=\"og:description\" content=\"Eisman famously called the housing bubble. 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